As filed with the U.S. Securities and Exchange Commission on January 11, 2021.
Registration No. 333-251650
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 3
to
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
890 5th Avenue Partners, Inc.
(Exact name of registrant as specified in its charter)
| |
Delaware
(State or other jurisdiction of
incorporation or organization)
|
|
|
6770
(Primary Standard Industrial
Classification Code Number)
|
|
|
85-3022075
(I.R.S. Employer
Identification Number)
|
|
14 Elm Place, Suite 206
Rye, New York 10580
Telephone: (575) 914-6575
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Adam Rothstein
Executive Chairman
890 5th Avenue Partners, Inc.
14 Elm Place, Suite 206
Rye, New York 10580
Telephone: (575) 914-6575
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
| |
Daniel J. Harris, Esq.
Jason R. Sanderson, Esq.
BraunHagey & Borden LLP
351 California Street
San Francisco, California 94104
Telephone: (415) 599-0210
|
|
|
Alice Hsu, Esq.
Jason Daniel, Esq.
Akin Gump Strauss Hauer & Feld LLP
One Bryant Park
New York, New York 10036
Telephone: (212) 872-1000
|
|
|
Alan I. Annex, Esq.
Jason T. Simon, Esq.
Greenberg Traurig, P.A.
333 S.E. 2nd Avenue
Miami, Florida 33131
Telephone: (305) 579-0500
|
|
Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. ☐
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| |
Large accelerated filer
☐
|
|
|
|
|
|
|
|
|
Accelerated filer
☐
|
|
| |
Non-accelerated filer
☒
|
|
|
|
|
|
|
|
|
Smaller reporting company
☒
Emerging growth company
☒
|
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act. ☐
CALCULATION OF REGISTRATION FEE
| |
|
|
Title of Each Class of
Security Being Registered
|
|
|
|
Amount Being
Registered
|
|
|
|
Proposed Maximum
Offering Price per
Security(1)
|
|
|
|
Proposed Maximum
Aggregate Offering
Price(1)
|
|
|
|
Amount of
Registration Fee
|
|
|
Units, each consisting of one share of Class A common stock, $0.0001 par value, and one-third of one redeemable warrant(2)
|
|
|
|
28,750,000 Units
|
|
|
|
|
$ |
10.00 |
|
|
|
|
|
$ |
287,500,000 |
|
|
|
|
|
$ |
31,366.25 |
|
|
|
Shares of Class A common stock included as part of the units(3)
|
|
|
|
28,750,000 Shares
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
—(4) |
|
|
|
Redeemable warrants included as part of the units(3)
|
|
|
|
9,583,333 Warrants
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
—(4) |
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
287,500,000 |
|
|
|
|
|
$ |
31,366.25(5) |
|
|
(1)
Estimated solely for the purpose of calculating the registration fee.
(2)
Includes 3,750,000 units, consisting of 3,750,000 shares of Class A common stock and 1,250,000 redeemable warrants, which may be issued upon exercise of a 45-day option granted to the underwriters to cover over-allotments, if any.
(3)
Pursuant to Rule 416, there are also being registered an indeterminable number of additional securities as may be issued to prevent dilution resulting from stock splits, stock dividends or similar transactions.
(4)
No fee pursuant to Rule 457(g).
(5)
Previously paid.
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION DATED JANUARY 11, 2021
890 5TH AVENUE PARTNERS, INC.
$250,000,000
25,000,000 Units
890 5th Avenue Partners, Inc. is a blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which we refer to as our initial business combination. We have not identified any specific business combination target and we have not, nor has anyone on our behalf, engaged in any substantive discussions, directly or indirectly, with any business combination target.
This is an initial public offering of our securities. Each unit has an offering price of $10.00 and consists of one share of our Class A common stock and one-third of one redeemable warrant. Each whole warrant entitles the holder thereof to purchase one share of our Class A common stock at a price of $11.50 per whole share, subject to adjustment as provided herein, and warrants may be exercised only for a whole number of shares of Class A common stock. The warrants will become exercisable on the later of 30 days after the completion of our initial business combination and 12 months from the closing of this offering, and will expire five years after the completion of our initial business combination or earlier upon redemption or liquidation, as described in this prospectus. We have also granted the underwriters a 45-day option from the date of this prospectus to purchase up to an additional 3,750,000 units to cover over-allotments, if any.
We will provide our public stockholders with the opportunity to redeem all or a portion of their shares of our Class A common stock upon the completion of our initial business combination at a per share price, payable in cash, equal to the aggregate amount then on deposit in the trust account described below as of two business days prior to the consummation of our initial business combination, including interest earned on the funds held in the trust account and not previously released to us to pay our franchise and income taxes, divided by the number of then outstanding shares of Class A common stock that were sold as part of the units in this offering, which we refer to collectively as our public shares, subject to the limitations described herein. If we are unable to complete our initial business combination within 24 months from the closing of this offering, we will redeem 100% of 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 us to pay our franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, subject to applicable law and certain conditions as further described herein.
Our sponsor, 200 Park Avenue Partners, LLC, PA 2 Co-Investment LLC (an affiliate of a representative of the underwriters) and Craig-Hallum Capital Group LLC (a representative of the underwriters) and certain of its affiliates have committed to purchase 702,500 units (or 777,500 units if the underwriters’ over-allotment option is exercised in full) (the “private placement units”), consisting of one share of Class A common stock (the “private placement shares”) and one-third of one warrant to purchase one share of Class A common stock (the “private placement warrants”), for $10.00 per unit, or an aggregate amount of $7,025,000 (or $7,775,000 if the underwriters’ over-allotment option is exercised in full), in a private placement that will close simultaneously with the closing of this offering. Each private placement warrant will be exercisable to purchase one share of our Class A common stock at a price of $11.50 per share, and the private placement shares will be identical to the shares of Class A common stock included in the units being sold in this offering, except the private placement shares will be subject to transfer restrictions and certain registration rights, as described herein. We refer to our sponsor, PA 2 Co-Investment LLC and Craig-Hallum Capital Group LLC (in its capacity as a purchaser of private placement units and founder shares) and certain of its affiliates purchasing private placement units and founder shares collectively throughout this prospectus as our “founders.” Any private placement warrant held by a holder other than our founders or its permitted transferees will have the same terms as the warrants included in the units being sold in this offering.
As of the date of this Prospectus, our founders own 7,187,500 shares of Class F common stock (up to 937,500 of which are subject to forfeiture by our founders depending on the extent to which the underwriters’ over-allotment option is exercised). The shares of Class F common stock will automatically convert into shares of Class A common stock at the time of our initial business combination on a one-for-one basis, subject to adjustment as provided herein. On all matters submitted to a vote of our stockholders, holders of the Class F common stock and holders of the Class A common stock will vote together as a single class, with each share of common stock entitling the holder to one vote.
Prior to this offering, there has been no public market for our units, Class A common stock or warrants. Our units have been approved for listing on The Nasdaq Capital Market, or Nasdaq, under the symbol “ENFAU”. We expect that the Class A common stock and warrants constituting the units will begin separate trading on the 52nd day following the date of this prospectus unless Cowen and Company, LLC and Craig-Hallum Capital Group LLC inform us of their decision to allow earlier separate trading, subject to our satisfaction of certain conditions. Once the securities constituting the units begin separate trading, we expect that the Class A common stock and warrants will be listed on Nasdaq under the symbols “ENFA” and “ENFAW,” respectively.
We are an “emerging growth company” and “smaller reporting company” under applicable federal securities laws and will be subject to reduced public company reporting requirements. Investing in our securities involves a high degree of risk. See “Risk Factors” on page 36 for a discussion of information that should be considered in connection with an investment in our securities. Investors will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings.
| |
|
|
Per Unit
|
|
|
Total
|
|
|
Public offering price
|
|
|
|
$ |
10.00 |
|
|
|
|
$ |
250,000,000 |
|
|
|
Underwriting discounts and commissions(1)
|
|
|
|
$ |
0.20 |
|
|
|
|
$ |
5,000,000 |
|
|
|
Proceeds, before expenses, to us
|
|
|
|
$ |
9.80 |
|
|
|
|
$ |
245,000,000 |
|
|
(1)
The underwriters will receive compensation in addition to the underwriting discount. See “Underwriting” for a description of compensation and other items of value payable to the underwriters.
Of the proceeds we receive from this offering and the sale to our founders of the private placement securities described in this prospectus, $250.0 million, or $287.5 million if the underwriters’ over-allotment option is exercised in full ($10.00 per unit in either case), will be deposited into a U.S.-based trust account with Continental Stock Transfer & Trust Company acting as trustee, and $2.025 million will be available to pay fees and expenses in connection with the closing of this offering and for working capital following this offering.
The underwriters are offering the units for sale on a firm commitment basis. Delivery of the units will be made on or about , 2021.
Neither the SEC nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
Joint Book-Running Managers
| |
Cowen
|
|
|
Craig-Hallum Capital Group
|
|
The date of this prospectus is , 2021
We are responsible for the information contained in this prospectus. We have not authorized anyone to provide any information or to make any representations other than those contained in this prospectus. We and the underwriters take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the units offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date.
TABLE OF CONTENTS
| |
|
|
Page
|
|
|
|
|
|
|
|
2
|
|
|
|
|
|
|
|
|
36
|
|
|
|
|
|
|
|
|
67
|
|
|
|
|
|
|
|
|
68
|
|
|
|
|
|
|
|
|
72
|
|
|
|
|
|
|
|
|
73
|
|
|
|
|
|
|
|
|
75
|
|
|
|
|
|
|
|
|
76
|
|
|
|
|
|
|
|
|
83
|
|
|
|
|
|
|
|
|
115
|
|
|
|
|
|
|
|
|
126
|
|
|
|
|
|
|
|
|
130
|
|
|
|
|
|
|
|
|
134
|
|
|
|
|
|
|
|
|
151
|
|
|
|
|
|
|
|
|
159
|
|
|
|
|
|
|
|
|
167
|
|
|
|
|
|
|
|
|
167
|
|
|
|
|
|
|
|
|
167
|
|
|
|
|
|
|
|
|
167
|
|
|
|
|
|
|
|
|
F-1
|
|
|
Until , 2021 (25 days after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to unsold allotments or subscriptions.
Trademarks
This prospectus contains references to trademarks and service marks belonging to other entities. Solely for convenience, trademarks and trade names referred to in this prospectus may appear without the ® or ™ symbols, but such references are not intended to indicate, in any way, that the applicable licensor will not assert, to the fullest extent under applicable law, its rights to these trademarks and trade names. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.
SUMMARY
This summary only highlights the more detailed information appearing elsewhere in this prospectus. As this is a summary, it does not contain all of the information that you should consider in making an investment decision. You should read this entire prospectus carefully, including the information under “Risk Factors” and our financial statements and the related notes included elsewhere in this prospectus, before investing.
Unless otherwise stated in this prospectus or the context otherwise requires, references to:
•
“anchor investor” is to a certain qualified institutional buyer that is a member of our sponsor;
•
“amended and restated certificate of incorporation” are to our certificate of incorporation to be in effect upon the completion of this offering;
•
“common stock” are to our Class A common stock and our Class F common stock (and, prior to is reclassification as Class F common stock prior to this offering, our common stock);
•
“Cowen” are to Cowen and Company, LLC, a representative of the underwriters;
•
“Craig-Hallum” are to Craig-Hallum Capital Group LLC, a representative of the underwriters;
•
“DGCL” are to the Delaware General Corporation Law, as the same may be amended from time to time;
•
“founders” are to our sponsor, PA 2 Co-Investment and Craig-Hallum (in its capacity as a purchaser of private placement units and founder shares) and certain of its affiliates purchasing private placement units and founder shares;
•
“founder shares” are to shares of our common stock initially purchased by our sponsor, PA 2 Co-Investment and Craig-Hallum and certain of its affiliates in a private placement prior to this offering and reclassified as Class F common stock prior to this offering and the shares of our Class A common stock issued upon the automatic conversion thereof at the time of our initial business combination as provided herein;
•
“initial stockholders” are to our sponsor and the other holders of our founder shares prior to this offering, including the other founders and members of our management;
•
“letter agreement” refers to the letter agreement, the form of which is filed as an exhibit to the registration statement of which this prospectus forms a part;
•
“management” or our “management team” are to our executive officers and directors from time to time;
•
“PA 2 Co-Investment” are to PA 2 Co-Investment LLC, an affiliate of Cowen;
•
“private placement securities” are to the private placement shares and the private placement warrants;
•
“private placement shares” are to the shares of our Class A common stock issued to our sponsor, PA 2 Co-Investment and Craig-Hallum and certain of its affiliates in a private placement simultaneously with the closing of this offering;
•
“private placement units” are to one private placement share and one-third of one private placement warrant to purchase one share of our Class A common stock;
•
“private placement warrants” are to the warrants to be issued to our sponsor, PA 2 Co-Investment and Craig-Hallum and certain of its affiliates in a private placement simultaneously with the closing of this offering;
•
“public shares” are to shares of our Class A common stock sold as part of the units in this offering (whether they are purchased in this offering or thereafter in the open market);
•
“public stockholders” are to the holders of our public shares, including our founders, management and advisors to the extent our founders, management or advisors purchase public shares, provided that each of their status as a “public stockholder” shall only exist with respect to such public shares;
•
“sponsor” are to 200 Park Avenue Partners, LLC, a Delaware limited liability company and an affiliate of Adam Rothstein, our Executive Chairman and Director; certain other members of our management team, advisors, director nominees and our anchor investor are also members of our sponsor;
•
“warrants” are to our warrants sold as part of the units in this offering (whether they are purchased in this offering or thereafter in the open market) and the private placement warrants; and
•
“we,” “us,” “company” or “our company” are to 890 5th Avenue Partners, Inc., a Delaware corporation.
Unless we tell you otherwise, the information in this prospectus assumes that the underwriters will not exercise their over-allotment option.
GENERAL
We are a newly incorporated blank check company incorporated as a Delaware corporation and formed for the purpose of effecting a merger, share exchange, asset acquisition, stock purchase, reorganization, recapitalization or other similar business combination with one or more businesses, which we refer to throughout this prospectus as our initial business combination. We have not identified any specific business combination target and we have not, nor has anyone on our behalf, engaged in any substantive discussions, directly or indirectly, with any business combination target.
While we may pursue an acquisition opportunity in any business, industry, sector or geography, we intend to focus on industries that align well with the relationships and experience of our team and sponsor. We will seek to capitalize on the exceptional operating experience, capital markets expertise and vast network of our management team and advisors across the technology, media and telecommunications sectors. There are several market verticals we have identified which are undergoing unprecedented levels of disruption in an extraordinarily accelerated timeframe due to a variety of trends, making them attractive pools for business combination candidates. At a high level, these trends include a tectonic shift in the velocity, magnitude of and manner in which content is consumed by consumers; increased time spent and intensity of engagement by consumers on new platforms and technologies; the accelerated digital and remote transition in areas such as social platforms, interactive entertainment, gaming, education, health and wellness; the importance of content and other value-added ancillary services as a tool to drive e-commerce, subscription services and other forms of monetization; and emphasis on scale driving operators to seek partnerships or exit.
Our team has been custom-built specifically with these trends in mind. We believe that our management team’s deep industry expertise and insight ranging across these disruptive trends provide us with a unique value proposition to potential business combination candidates. In addition to our extensive operating experience, key members of team have sourced, negotiated and executed various investments, acquisitions and other business partnerships with, or on behalf of, leading global organizations in the broader technology, media and telecommunications sector.
We intend to focus our search on companies with an enterprise value between $750 million and $2 billion. We believe that our management’s extensive experience investing in, acquiring, operating and growing businesses in these sectors and size ranges, coupled with our vast network of leading industry executives, board members, entrepreneurs, investors and deal makers, provide us with unique insights and access to key decision makers. We believe this collective experience, real-time market intelligence and vast network will translate to strong proprietary deal flow enabling us to source deals effectively and consummate an attractive initial business combination.
OUR TEAM
Adam Rothstein serves as our Executive Chairman and board member. Mr. Rothstein is a Co-Founder and General Partner of Disruptive Technology Partners, an Israeli technology-focused early-stage investment fund, and Disruptive Growth, a collection of late-stage investment vehicles focused on Israeli technology, which he co-founded in 2013 and 2014 respectively. Since 2014, Mr. Rothstein has been a Venture Partner in Subversive Capital, and the Managing Member of 1007 Mountain Drive Partners, LLC, which are both consulting and investment vehicles. Mr. Rothstein is also a sponsor and director of Roth CH Acquisition I Co. (NASDAQ: ROCH), a special purpose acquisition company that has entered into an agreement and plan
of merger with PureCycle Technologies LLC pursuant to which Roth CH Acquisition I Co. will acquire PureCycle Technologies LLC, Roth CH Acquisition II Co. (NASDAQ: ROCCU), which is a special purpose acquisition company, and Subversive Capital Acquisition Corp. (NEO: SVC.A.U) (OTCQX: SBVCF), a special purpose acquisition company that has just announced the acquisition of Caliva, Left Coast Ventures, and Sisu. Mr. Rothstein has over 20 years of investment experience, and currently sits on the boards of directors of several early- and mid-stage technology and media companies both in the US and in Israel and is on the Advisory Board for the Leeds School of Business at the University of Colorado, Boulder.
Emiliano Calemzuk serves as our Chief Executive Officer and a board member. Mr. Calemzuk is a media executive and entrepreneur with 20 years of experience in the international media and management space. He currently serves as the Lead Independent Director and Chairman of the Nominating and Corporate Governance at MercadoLibre, Inc. (Nasdaq: MELI), an e-commerce and payments platform in Latin America. Mr. Calemzuk was recently Co-Founder and CEO of RAZE, a Los Angeles-based media venture which produces traditional and social content geared toward a Hispanic and Latin American audience in the United States. RAZE was acquired by WarnerMedia’s Turner Latin America in July 2020. In 2015 and 2016 Mr. Calemzuk partnered with Time Inc., publisher of Time, Sports Illustrated, People, and other major magazine titles to assist with Time Inc.’s entry into digital video. In 2013 and 2014 Mr. Calemzuk joined Jeff Sagansky’s and Harry Sloan’s $400 million special purpose acquisition company, Silver Eagle Acquisition Company, as target company Chief Executive Officer designee. Mr. Calemzuk had a 14-year career at 21st Century Fox / News Corp in the C-suite. He served as Chief Executive Officer of Shine Group Americas, a unit of 21st Century Fox, from 2010 to 2012. In this capacity Mr. Calemzuk oversaw scripted and non-scripted television series. From 2007 to 2010, Mr. Calemzuk served as President of Fox Television Studios. From 2002 to 2007 Mr. Calemzuk was based in Rome, Italy, as President of FOX International Channels Europe where he managed the operation of the FOX Italian TV group. In addition, Mr. Calemzuk supervised the FOX operation in Spain, France, Germany, Turkey, and Eastern Europe. Before moving to Rome, Mr. Calemzuk was Vice President and Deputy Managing Director of FOX Latin American Channels. In 2000 Mr. Calemzuk held the post of General Manager of Fox Kids Latin America.
Michael Del Nin has agreed to serve as our Chief Financial Officer and Chief Operating Officer commencing prior to the closing of this offering. Mr. Del Nin was the Co-Chief Executive Officer of Central European Media Enterprises Ltd. (Nasdaq: CETV), one of Europe’s leading television broadcasters, from September 2013 until its sale in October 2020, and was a member of its Board of Directors from October 2009 until September 2013. Mr. Del Nin previously was the Senior Vice President of International and Corporate Strategy at Time Warner Inc. from 2008 until 2013, in which capacity he helped drive Time Warner Inc.’s global strategy and business development initiatives, with a particular focus on international operations and investments. From 2006 to 2008, Mr. Del Nin was the Senior Vice President responsible for Mergers and Acquisitions at Time Warner Inc. Mr. Del Nin’s prior experience includes roles at New Line Cinema, as Senior Vice President, Business Development, and as an investment banker at Salomon Smith Barney focused on the media industry.
Linda Yaccarino has agreed to serve as a board member commencing upon the effectiveness of the registration statement of which this prospectus forms a part. As Chairman of Global Advertising and Partnerships at NBCUniversal, Ms. Yaccarino is responsible for managing over $10 billion in revenue annually and stewarding the company’s portfolio of linear networks, digital platforms, distribution partnerships, and client relationships. At NBCUniversal, Ms. Yaccarino, with the help of her 1,500-person team, connects established and emerging brands to hundreds of millions of viewers. Ms. Yaccarino also leads a joint Global Advertising & Partnerships team at NBCUniversal, which oversees the company’s One Platform offering worldwide. Ms. Yaccarino is the Chairman of the World Economic Forum’s Taskforce on Future of Work, and the Vice Chairman of The Advertising Council. Ms. Yaccarino sits on the Board of Directors of Ascena Retail Group (OTC: ASNAQ) and is a member of the President’s Council on Sports, Fitness, and Nutrition.
Kelli Turner has agreed to serve as a board member commencing upon the effectiveness of the registration statement of which this prospectus forms a part. Ms. Turner is currently President and Chief Operating Officer at SESAC, Inc., a music rights licensing company. She is also general partner of RSL Venture Partners and was on the Board of Directors of Central European Media Enterprises Ltd. (Nasdaq: CETV), a media and entertainment company operating in Central and Eastern European markets, until
its sale in October 2020. She was previously President and Chief Financial Officer of RSL Management Corporation from February 2011 to April 2012. Ms. Turner previously was Chief Financial Officer and Executive Vice President of Martha Stewart Living Omnimedia, Inc., a diversified media and merchandising company, from 2009 to 2011, where she was responsible for all aspects of the company’s financial operations, while working closely with the executive team in shaping Martha Stewart Living Omnimedia, Inc.’s business strategy and capital allocation process. A lawyer and a registered certified public accountant with significant experience in the media industry, Ms. Turner joined Martha Stewart Living Omnimedia, Inc. in 2009 from Time Warner Inc., where she held the position of Senior Vice President, Operations in the Office of the Chairman and Chief Executive Officer. Prior to that, she served as Senior Vice President, Business Development for New Line Cinema from 2006 to 2007 after having served as Time Warner Inc.’s Vice President, Investor Relations from 2004 to 2006. Ms. Turner worked in investment banking for years with positions at Allen & Company and Salomon Smith Barney prior to joining Time Warner Inc. Early in her career, she also gained tax and audit experience as a certified public accountant at Ernst & Young, LLP.
David Bank has agreed to serve as a board member commencing upon the effectiveness of the registration statement of which this prospectus forms a part. Mr. Bank is Executive Vice President, Corporate Development and Strategy for A+E Networks. He was named to the role in July 2019 and is responsible for long-term strategic and business development plans, including identifying potential partners in the marketplace, and exploring opportunities that align with the company’s forecasted objectives. Mr. Bank is a veteran analyst and financial professional with expertise in the media and entertainment industry. Prior to joining A+E Networks, he served as Executive Vice President, Investor Relations at CBS Corp. Previously, Mr. Bank had a 16-year career as a sell-side equity research analyst and Managing Director at RBC Capital Markets where he primarily covered Large Cap Media and Entertainment Companies. He also served as Associate Director of The US Equity Research Department at RBC Capital Markets. Mr. Bank began his career as an investment banker focusing on financial institutions at First Boston, then joined Furman Selz as an Investment Banker focused on Media.
Scott Flanders has agreed to serve as a board member commencing upon the effectiveness of the registration statement of which this prospectus forms a part. In his current role as Chief Executive Officer for eHealth, Inc. (Nasdaq: EHTH), Mr. Flanders has managed the company through vast industry changes. In addition to eHealth, Inc., Mr. Flanders has served as Chief Executive Officer of The Columbia House Company, Freedom Communications and Playboy Enterprises.
Jon Jashni has agreed to serve as a board member commencing upon the effectiveness of the registration statement of which this prospectus forms a part. Mr. Jashni is a media investor, advisor and content executive who provides services through his consulting firm Raintree Ventures. He is currently a Founding Advisor to Influence Media, a music fund allied with Warner Music, and Sreda Global, a leading Russian TV studio. Mr. Jashni also serves as a strategic advisor to such entities as Mass Appeal, Bonfire Game Studios, Prometheus Entertainment and Wevr and is a Founding Partner of Synthesis Entertainment. Over the course of his career, Mr. Jashni has been associated with the creation and monetization of content that has generated over $7 billion in gross revenue. From 2006 to 2016, Mr. Jashni was Co-Founder, President and Chief Creative Officer of Legendary Entertainment. During his 10-year tenure at the company he was integral to establishing and evolving the company into a leading, diversified, multi-platform media company. Comprised of film, television, digital and comics divisions, Legendary Entertainment is dedicated to owning, producing and delivering mainstream content to global audiences. Mr. Jashni has been a lead participant in corporate transactions involving such companies as Time Warner, Comcast NBCUniversal, Fidelity, Waddell & Reed, Softbank and Wanda (which purchased Legendary Entertainment in 2016). Mr. Jashni has also been involved in the acquisition and scaling of a vanguard applied analytics entity which developed proprietary methodologies for optimizing media buying, leveraging social media and finely calibrating consumer interactions. Prior to co-founding and joining Legendary Entertainment, Mr. Jashni was President of Hyde Park Entertainment, President of Irving Azoff’s Warner Bros-based Giant Pictures, Senior Vice President of Production at 20th Century Fox and Creative Executive at Columbia Pictures.
We will further be supported by our team of advisors from leading global companies with experience in a wide range of subsectors and functional areas. This support is intended to provide us with access to their expertise and extensive industry networks from which we plan to source and evaluate targets as well as devise plans to optimize any business that we acquire.
Our team of advisors includes:
Greg Coleman. Greg Coleman is an Executive in Residence at Lerer Hippeau Ventures and sits on numerous boards at the intersection of technology, media and advertising including BuzzFeed Japan, LoopMe, Skimlinks and Botify. Most recently, Mr. Coleman was the President of BuzzFeed and Criteo, an advertising technology company. Mr. Coleman has previously held roles as President and Chief Revenue Officer at the Huffington Post and the EVP of Global Sales at Yahoo.
Beth Gulas. Beth Gulas is a consultant to high profile executives and talent, and acts as a global resource to a variety of industries and individuals. Ms. Gulas has used her skills as an experienced consultant to anticipate, evaluate and manage critical issues such as strategic thinking and managing change, cross-functional teams, leadership development and coaching for both small and large organizations over the course of her career.
Andy Kleinman. Andy Kleinman brings over 20 years of experience working on innovation at the intersection of technology and entertainment. Mr. Kleinman’s latest company, Wonder, created the first mobile operating system capable of turning a smartphone into a gaming and entertainment console. Prior to Wonder, Mr. Kleinman was an early executive and Chief Business Officer at Scopely. Prior to Scopely, Mr. Kleinman was Vice President of International at Zynga.
John Kosner. John Kosner brings four decades of leadership experience across the sports media landscape. Today, Mr. Kosner is president of Kosner Media, a digital media and sports consultancy firm. In 2018, Mr. Kosner and the late NBA Commissioner Emeritus David Stern created Micromanagement Ventures, a portfolio of sports technology start-ups. Previously, Mr. Kosner led ESPN digital media from 2003 to 2017, and prior to that held similar leadership roles at Sports Illustrated, NBA, CBS Sports and NBC Sports.
With respect to the above, past performance of our senior management team and advisors is not a guarantee of either (i) success with respect to a business combination that may be consummated or (ii) the ability to successfully identify and execute a transaction. You should not rely on the historical record of management or our advisors as indicative of future performance. Not all members of our management team or advisors have past experience with a blank check company or special purpose acquisition company. For a list of our executive officers, executive officer nominees and entities for which a conflict of interest may or does exist between such officers and the company, please refer to “Management — Conflicts of Interest.”
MARKET OPPORTUNITY
Our business combination and value creation strategy is to identify and complete our initial business combination with a growth-oriented, market-leading company in an industry that complements the collective investment experience and expertise of our management team, and to build long-term shareholder value. The broader technology, media and telecommunications markets are undergoing an unprecedented level of disruption at an increasing rate, as consumer habits broadly migrate toward digital offerings. The secular forces behind this disruption are rapidly evolving, as the broad digitalization across all industries has been rapidly accelerated by the effects of the COVID-19 pandemic, resulting in a growing ecosystem of companies, properties and assets which we believe are well positioned to thrive in this digital-first world.
Some of these secular forces include:
•
The shift of content consumption to a direct-to-consumer distribution paradigm, including user generated content;
•
An enhanced ability to leverage a single content or technology asset base over a global total addressable marketplace;
•
Increased time spent by consumers on new platforms and technologies;
•
Greater urgency and desire for consumers to engage digitally in various activities (social, sports and entertainment, education, health and wellness, etc.);
•
A dynamic and rapidly evolving regulatory environment across numerous areas, including changes in data privacy and security practices and compliance, distribution platforms for digital apps and
services like Apple and Google, industry specific measures and a fractured geopolitical landscape with countries like China;
•
Volatility in the C-suite of many major legacy companies, re-aligning priorities and strategies;
•
The importance of premium content and other value-added ancillary services as a tool to drive e-commerce, subscription services and other forms of monetization; and
•
Emphasis on scale driving operators to seek partnership or exit.
We believe that this evolving landscape in combination with volatility in the capital markets has created a robust environment of high-quality growth platforms considering strategic alternatives and seeking to scale through both organic initiatives and strategic combinations. We also believe there may be an accelerating pace of non-core, but high-quality, divestitures that are likely to accompany a rapidly changing C-suite and regulatory environment at many global technology, media and telecommunications companies where long-term strategies are now being scrutinized and re-evaluated.
COMPETITIVE ADVANTAGE
The network, sourcing, valuation, diligence and execution capabilities of our team should provide us what we believe to be a significant and attractive pipeline of opportunities. Our competitive strengths include:
•
Extensive Operating Experience. We meticulously composed our Executive Management Team, Board of Directors and Advisory Board with some of the top operators in the industry with notable experience in operational, financial, C-suite and board-level roles.
•
Proprietary Sourcing Capabilities Developed Through Strong Network of Relationships. We intend to capitalize on our management team’s domain expertise acquired through decades of strategic deal-making in the media, digital media/consumer technology, interactive entertainment and related industries. We believe our management’s deep network of CEO-level and other C-suite/board relationships in addition to pre-eminent private and public market investors will present us with a substantial number of potential business combination targets.
•
Driving Public Shareholder Value. We plan to work with the management team of our initial business combination to build shareholder value both organically and inorganically. Our team has collectively achieved success at a wide variety of legacy companies and emerging growth platforms, many of which were publicly traded. All members of our team have played key executive operating roles and/or board members and/or investors at these organizations. In addition, the key roles played by this team have often included key growth initiatives and expansion into new geographies or products.
BUSINESS STRATEGY
Our intent is to identify and complete our initial business combination with a company that capitalizes on these market opportunities, complements the experience of our management and board of directors, and can benefit from our unique combination of our team’s collective skills. The unique domain operating expertise, global network of potential acquisition and financial expertise that our executive management team, board of directors and advisory board members possess will be a significant competitive advantage in capitalizing on opportunities within this environment. Select examples of the specific verticals we expect to focus on include:
•
Online and mobile gaming content and platforms;
•
Sports media and technologies including sports wagering and eSports;
•
Edu-tainment platforms;
•
Fitness, health and wellness platforms;
•
Over the top (OTT) entertainment, including subscription video on demand (SVOD) / advertising video on demand (AVOD);
•
Evolving broadcasting technology;
•
Studio and content production;
•
Music streaming and podcasting;
•
Advertising technologies; and
•
Digitally enabled marketplaces, services and platforms.
Our team has been purposefully assembled with these key macro trends and targeted verticals in mind. We intend to identify and execute operating company acquisitions where we can add value directly through our operating and financial expertise as well as through strategic and financial partnerships to drive cross-synergies and increased efficiency.
Our team has collectively achieved success at a wide variety of legacy companies and emerging growth platforms, many of which were publicly traded. All members of our team have played key executive operating roles and/or board members and/or investors at these organizations. In addition, the key roles played by this team have often included key growth initiatives and expansion into new geographies or products. Some of the companies and organizations that our team has previously been affiliated with include:
| |
A+E Networks
|
|
|
Mercado Libre
|
|
| |
Akamai
|
|
|
NBCUniversal
|
|
| |
Allen & Co.
|
|
|
Playboy
|
|
| |
Buzzfeed
|
|
|
RBC Capital Markets
|
|
| |
CBS
|
|
|
Salomon Smith Barney
|
|
| |
Central European Media
|
|
|
SESAC
|
|
| |
Cisco
|
|
|
Sky
|
|
| |
Criteo
|
|
|
SNAP
|
|
| |
Disney/ESPN
|
|
|
Sony
|
|
| |
E-Health
|
|
|
The EW Scripps Company
|
|
| |
Fox Studios
|
|
|
The National Basketball Association
|
|
| |
Freedom Communications
|
|
|
The White House
|
|
| |
Huffington Post
|
|
|
Time Warner/Turner Networks
|
|
| |
IronSource
|
|
|
Valiant Entertainment
|
|
| |
Legendary Pictures/Legendary China
|
|
|
Vox Media
|
|
| |
Martha Stewart Living
|
|
|
Zynga
|
|
BUSINESS COMBINATION CRITERIA
Consistent with our business strategy, we have developed the following general criteria and guidelines that we believe are important in evaluating prospective initial business combinations. We will use these criteria and guidelines in evaluating business combination opportunities, but we may decide to enter into our initial business combination with a target business that does not meet these criteria and guidelines.
•
Business with Significant Revenue and Earnings Growth Potential. We will seek to acquire one or more businesses that we believe will have multiple organic and M&A-driven growth opportunities over time. We will search for attractive, growth-oriented businesses that exhibit sound, underlying fundamentals as well as demonstrated revenue growth and a clear path to profitability. This includes such potential targets that are currently, or have the potential to be, a category leader with long-term growth potential.
•
Targets That Can Benefit from our Management Team’s Relationships and Experience. While we may pursue an initial business combination opportunity in any industry or sector, we intend to capitalize on our management team’s domain expertise acquired through decades of strategic deal-making in the media, digital media/consumer technology, interactive entertainment and related industries. We believe our management’s deep network of CEO-level and other C-suite/board relationships in addition to pre-eminent private and public market investors will give us a number of competitive advantages and will present us with a substantial number of potential business combination targets, particularly in the aforementioned industries.
•
Companies with Potential to Benefit from Digital Disruption. We will seek to acquire one or more businesses which currently, or have the potential to, benefit from digital disruption, or a disruption of the traditional business model or market.
•
High-Growth Markets. We will seek out opportunities in higher-growth sectors in the U.S. as well as in selected developed and emerging international markets.
These criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that our management may deem relevant. In the event that we decide to enter into our initial business combination with a target business that does not meet the above criteria and guidelines, we will disclose that the target business does not meet the above criteria in our stockholder communications related to our initial business combination, which, as discussed in this prospectus, would be in the form of tender offer documents or proxy solicitation materials that we would file with the SEC.
In evaluating a prospective target business, we expect to conduct a thorough due diligence review which will encompass, among other things, meetings with incumbent management, document reviews, inspection of facilities, as well as a review of financial, operational, legal and other information which will be made available to us. We will also utilize our operational and capital planning experience.
INITIAL BUSINESS COMBINATION
Nasdaq listing rules require that our initial business combination must be with one or more target businesses that together have an aggregate fair market value equal to at least 80% of the value of the trust account (excluding any deferred underwriters fees, if any, and taxes payable on the income earned on the trust account) at the time of our signing a definitive agreement in connection with our initial business combination. We refer to this as the 80% of net assets test. If our board of directors is not able to independently determine the fair market value of the target business or businesses, we will obtain an opinion from an independent investment banking firm that is a member of the Financial Industry Regulatory Authority, or FINRA, or from an independent accounting firm, with respect to the satisfaction of such criteria.
We anticipate structuring our initial business combination so that the post-transaction company in which our public stockholders own shares will own or acquire 100% of the outstanding equity interests or assets of the target business or businesses. We may, however, structure our initial business combination such that the post-transaction company owns or acquires less than 100% of such interests or assets of the target business in order to meet certain objectives of the target management team or stockholders or for other reasons, but we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended, or the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to our initial business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the initial business combination. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be taken into account for purposes of the 80% of net assets test. If our initial business combination involves more than one target business, the 80% of net assets test will be based on the aggregate value of all of the target businesses.
Prior to the date of this prospectus, we will file a Registration Statement on Form 8-A with the SEC to voluntarily register our securities under Section 12 of the Securities Exchange Act of 1934, as amended, or the Exchange Act. As a result, we will be subject to the rules and regulations promulgated under the Exchange
Act. We have no current intention of filing a Form 15 to suspend our reporting or other obligations under the Exchange Act prior or subsequent to the consummation of our initial business combination.
SOURCING OF POTENTIAL INITIAL BUSINESS COMBINATION TARGETS
We believe our management team’s and advisors’ significant transaction experience, real-time market intelligence and deep network of relationships will provide us with a substantial number of potential initial business combination targets. Over the course of their careers, the members of our management team and advisors have developed a broad network of contacts and corporate relationships around the world. This network has grown through the activities of our management team’s and advisors’ work with and for prominent media and digital media/consumer technology companies, including providing strategic advisory services to the senior management teams and boards of directors, sourcing, acquiring and financing businesses, the reputation of our management team and advisors for integrity and fair dealing with sellers, financing sources and target management teams and the experience of our management team and advisors in executing transactions under varying economic and financial market conditions.
We believe that the network of contacts and relationships of our management team and advisors will provide us with important sources of business combination opportunities across the subsectors we find attractive. In addition, we anticipate that target business combination candidates will be brought to our attention from various unaffiliated sources, including investment banks and other market participants, private equity funds, founders/entrepreneurs and large business enterprises seeking to divest non-core assets or divisions.
We are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, executive officers, directors or advisors, or completing the business combination through a joint venture or other form of shared ownership with our sponsor, executive officers, directors or advisors. In the event we seek to complete an initial business combination with a target that is affiliated with our sponsor, executive officers, directors or advisors, we, or a committee of independent directors, would obtain an opinion from an independent investment banking firm that is a member of FINRA or an independent accounting firm stating that such an initial business combination is fair to our company from a financial point of view.
Members of our management team and our independent directors and advisors will directly or indirectly own founder shares and/or private placement securities following this offering and, accordingly, may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate our initial business combination. Further, each of our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect to our initial business combination.
As more fully discussed in “Management — Conflicts of Interest,” each of our officers, directors and advisors presently has, and any of them in the future may have additional, fiduciary or contractual obligations to another entity pursuant to which such officer or director is or will be required to present a business combination opportunity to such entity. Accordingly, if any of our officers, directors or advisors becomes aware of a business combination opportunity which is suitable for an entity to which he or she has then current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such business combination opportunity to such other entity. Our amended and restated certificate of incorporation will provide that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of the company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue, and to the extent the director or officer is permitted to refer that opportunity to us without violating another legal obligation. We do not believe, however, that the fiduciary duties or contractual obligations of our officers, directors or advisors will materially affect our ability to complete our initial business combination.
In addition, certain of our officers, directors and advisors currently sponsor and/or serve as officers or directors of, and our sponsor, officers, directors and advisors may in the future sponsor and/or serve as officers, directors or advisors of, other special purpose acquisition companies similar to ours or may pursue
other business or investment ventures during the period in which we are seeking an initial business combination. As a result, our sponsor, officers, directors or advisors could have conflicts of interest in determining whether to present business combination opportunities to us or to any other special purpose acquisition company with which they are or may become involved. Although we have no formal policy in place for vetting potential conflicts of interest, our board of directors will review any potential conflicts of interest of our officers or directors on a case-by-case basis. However, we do not believe that any such potential conflicts would materially affect our ability to complete our initial business combination.
CORPORATE INFORMATION
We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, or the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile.
In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period.
We 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 this offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the end of the prior fiscal year’s second fiscal quarter; and (2) the date on which we have issued more than $1.00 billion in non-convertible debt securities during the prior three-year period. References herein to “emerging growth company” shall have the meaning associated with it in the JOBS Act.
Additionally, we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our common stock held by non-affiliates exceeds $250 million as of the prior June 30, or (2) our annual revenues exceeded $100 million during such completed fiscal year and the market value of our common stock held by non-affiliates exceeds $700 million as of the prior June 30.
Our executive offices are located at 14 Elm Place, Suite 206, Rye, New York 10580 and our telephone number is (575) 914-6575.
THE OFFERING
In making your decision whether to invest in our securities, you should take into account not only the backgrounds of the members of our management team and advisors, but also the special risks we face as a blank check company and the fact that this offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act. You will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. You should carefully consider these and the other risks set forth in the section below entitled “Risk Factors” beginning on page 36 of this prospectus.
25,000,000 units (or 28,750,000 units if the underwriters’ over-allotment option is exercised in full), at $10.00 per unit each unit, consisting of:
•
one share of Class A common stock; and
•
one-third of one redeemable warrant to purchase one share of Class A common stock.
We have been approved to list the units, and, once they begin separate trading, the Class A common stock and warrants, on Nasdaq under the following symbols:
Units: “ENFAU”
Class A Common Stock: “ENFA”
Warrants: “ENFAW”
Trading commencement and separation of Class A common stock and warrants
The units will begin trading promptly after the date of this prospectus. We expect that the Class A common stock and warrants constituting the units will begin separate trading on the 52nd day following the date of this prospectus unless Cowen and Company, LLC and Craig-Hallum Capital Group LLC inform us of their decision to allow earlier separate trading, subject to our having filed the Current Report on Form 8-K described below and having issued a press release announcing when such separate trading will begin. Once the shares of Class A common stock and warrants commence separate trading, holders will have the option to continue to hold units or separate their units into the component securities. Holders will need to have their brokers contact our transfer agent in order to separate the units into shares of Class A common stock and warrants. No fractional warrants will be issued upon separation of the units and only whole warrants will trade. Accordingly, unless you purchase at least three units, you will not be able to receive or trade a whole warrant.
Separate trading of the Class A common stock and warrants is prohibited until we have filed a Current Report on Form 8-K
In no event will the Class A common stock and warrants be traded separately until we have filed with the SEC a Current Report on Form 8-K which includes an audited balance sheet of the Company reflecting our receipt of the gross proceeds at the closing of this offering. We will file the Current Report on Form 8-K promptly after the closing of this offering, which closing is anticipated to take place three business days from the date of this prospectus. If the underwriters’ over-allotment option is exercised following the initial filing of such Current
Report on Form 8-K, a second or amended Current Report on Form 8-K will be filed to provide updated financial information to reflect the exercise of the underwriters’ over-allotment option.
Units:
Number outstanding before this offering
0
Number outstanding after this
offering
25,702,500(1)
Common stock:
Number outstanding before this offering
7,187,500(3)(5)
Number outstanding after this
offering
31,952,500(2)(4)(5)
Warrants:
Number of private placement warrants to be sold in a private placement simultaneously with this offering
234,167(2)
Number of warrants to be outstanding after this offering and the private placement
8,567,500(2)(6)
Each whole warrant offered in this offering is exercisable to purchase one share of Class A common stock, subject to adjustment as provided herein, and only whole warrants are exercisable. No fractional warrants will be issued upon separation of the units and only whole warrants will trade. We structured each unit to contain one-third of one warrant, with each whole warrant exercisable for one share of Class A common stock, as compared to units issued by some other similar special purpose acquisition companies which contain whole warrants exercisable for one whole share, in order to reduce the dilutive effect of the warrants upon completion of a business combination as compared to units that each contain a warrant to purchase one whole share, thus making us, we believe, a more attractive business combination partner for target businesses.
(1)
Includes 25,000,000 public units and 702,500 private placement units. Assumes no exercise of the underwriters’ over-allotment option.
(2)
Assumes no exercise of the underwriters’ over-allotment option and the forfeiture by our founders of 937,500 founder shares.
(3)
Consists solely of founder shares including up to 821,741 founder shares that are subject to forfeiture by our sponsor, up to 81,030 founder shares that are subject to forfeiture by PA 2 Co-Investment and up to 34,729 founder shares that are subject to forfeiture Craig-Hallum and certain of its affiliates, in each case depending on the extent to which the underwriters’ over-allotment option is exercised.
(4)
Includes 25,000,000 public shares, 702,500 private placement shares and 6,250,000 founder shares.
(5)
Founder shares are classified as shares of Class F common stock, which shares will automatically convert into shares of Class A common stock at the time of our initial business combination on a one-for-one basis, subject to adjustment as described below adjacent to the caption “Founder shares conversion and anti-dilution rights.”
(6)
Includes 8,333,333 public warrants and 234,167 private placement warrants.
$11.50 per whole share of Class A common stock, subject to adjustment as described herein.
In addition, if (x) we issue additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of our initial business combination at an issue price or effective issue price of less than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by our board of directors and, in the case of any such issuance to our initial stockholders or their respective affiliates, without taking into account any founder shares or private placement shares held by them prior to such issuance), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of our initial business combination, and (z) the volume weighted average trading price of our Class A common stock during the 10 trading day period starting on the trading day after the day on which we consummate our initial business combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the Market Value, and the $18.00 per share redemption trigger price described below under “Redemption of warrants when the price per share of Class A common stock equals or exceeds $18.00” will be adjusted (to the nearest cent) to be equal to 180% of the Market Value.
The warrants will become exercisable on the later of:
•
30 days after the completion of our initial business combination; and
•
12 months from the closing of this offering;
provided in each case that we have an effective registration statement under the Securities Act covering the shares of Class A common stock issuable upon exercise of the warrants and a current prospectus relating to them is available and such shares are registered, qualified or exempt from registration under the securities, or blue sky, laws of the state of residence of the holder (or we permit holders to exercise their warrants on a cashless basis under the circumstances specified in the warrant agreement).
We are not registering the shares of Class A common stock issuable upon exercise of the warrants at this time. However, we have agreed that as soon as practicable, but in no event later than 15 business days after the closing of our initial business combination, we will use our best efforts to file with the SEC and have an effective registration statement covering the issuance of the shares of Class A common stock issuable upon exercise of the warrants, and to maintain a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed; provided, that if our Class A common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of
the Securities Act, we may, at our option, require holders of public warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event we so elect, we will not be required to file or maintain in effect a registration statement.
The warrants will expire at 5:00 p.m., New York City time, five years after the completion of our initial business combination or earlier upon redemption or liquidation; provided, however, that the warrants held by PA 2 Co-Investment and Craig-Hallum and their respective affiliates will not be exercisable more than five years after the effective date of the registration statement of which this prospectus forms a part in accordance with FINRA Rule 5110(g)(8). On the exercise of any warrant, the warrant exercise price will be paid directly to us and not placed in the trust account.
Redemption of warrants when the price per share of Class A common stock equals or exceeds $18.00
Once the warrants become exercisable, we may redeem the outstanding warrants (except as described herein with respect to the private placement warrants):
•
in whole and not in part;
•
at a price of $0.01 per warrant;
•
upon a minimum of 30 days’ prior written notice of redemption, which we refer to as the 30-day redemption period; and
•
if, and only if, the last reported sale price of our Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like and for certain issuances of Class A common stock and equity-linked securities as described above) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which we send the notice of redemption to the warrant holders.
We will not redeem the warrants unless a registration statement under the Securities Act covering the issuance of the shares of Class A common stock issuable upon exercise of the warrants is then effective and a current prospectus relating to those shares of common stock is available throughout the 30-day redemption period, except if the warrants may be exercised on a cashless basis and such cashless exercise is exempt from registration under the Securities Act. 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.
If we call the warrants for redemption as described above, our management will have the option to require all holders that wish to exercise warrants to do so on a “cashless basis.” In determining whether to require all holders to exercise their
warrants on a “cashless basis,” our management will consider, among other factors, our cash position, the number of warrants that are outstanding and the dilutive effect on our stockholders of issuing the maximum number of shares of Class A common stock issuable upon the exercise of our warrants. In such event, each holder would pay the exercise price by surrendering the warrants for that number of shares of Class A common stock equal to the the lesser of (A) quotient obtained by dividing (x) the product of the number of shares of Class A common stock underlying the warrants, multiplied by the excess of the “fair market value” (defined below) over the exercise price of the warrants by (y) the fair market value and (B) 0.361. The “fair market value” shall mean the average last reported sale price of the Class A common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. Please see the section entitled “Description of Securities — Warrants — Public Stockholders’ Warrants” for additional information.
None of the private placement warrants will be redeemable by us so long as they are held by our initial stockholders or their permitted transferees.
Redemption of warrants when the price per share of Class A common stock equals or exceeds $10.00
Commencing ninety days after the warrants become exercisable, we may redeem the outstanding warrants (except as described herein with respect to the private placement warrants):
•
in whole and not in part;
•
at a price of $0.10 per warrant provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares of Class A common stock determined by reference to the table set forth under “Description of Securities — Warrants — Public Stockholders’ Warrants” based on the redemption date and the “fair market value” of our Class A common stock (as defined below) except as otherwise described in “Description of Securities — Warrants — Public Stockholders’ Warrants”;
•
upon a minimum of 30 days’ prior written notice of redemption;
•
if, and only if, the last reported sale price of our Class A common stock equals or exceeds $10.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) on the trading day prior to the date on which we send the notice of redemption to the warrant holders; and
•
if, and only if, there is an effective registration statement covering the issuance of the shares of Class A common stock issuable upon exercise of the
is warrants and a current prospectus relating thereto available throughout the 30-day period after written notice of redemption is given.
The “fair market value” of our Class A common stock for this purpose shall mean the average last reported sale price of our Class A common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. This redemption feature differs from the typical warrant redemption features used in many other blank check offerings. In no event will the warrants be exercisable in connection with this redemption feature for more than 0.361 shares of Class A common stock per warrant (subject to adjustment).
No fractional shares of Class A common stock will be issued upon redemption. If, upon redemption, a holder would be entitled to receive a fractional interest in a share, we will round down to the nearest whole number of the number of shares of Class A common stock to be issued to the holder. Please see “Description of Securities — Warrants — Public Stockholders’ Warrants” for additional information.
Pursuant to the warrant agreement, references above to Class A common stock shall include a security other than Class A common stock into which the Class A common stock has been converted or exchanged for in the event we are not the surviving company in our initial business combination.
On October 15, 2020, our sponsor purchased an aggregate of 7,187,500 founder shares for an aggregate purchase price of $25,000, or approximately $0.003 per share. In December 2020, our sponsor sold 621,222 founder shares to PA 2 Co-Investment, and in January 2021 sold an aggregate of 266,238 founder shares to Craig-Hallum and certain of its affiliates and an aggregate of 105,000 founder shares to our independent director nominees (20,000 shares to each of Ms. Yaccarino and Messrs. Flanders, Bank and Jashni, and 25,000 to Ms. Turner), in each case at their original per share purchase price. Depending on the extent to which the underwriters’ over-allotment option is not fully exercised, our sponsor may forfeit up to 821,741 founder shares, PA 2 Co-Investment may forfeit up to 81,030 founder shares and Craig-Hallum and certain of its affiliates may forfeit up to 34,729 founder shares. Prior to the initial investment in the company of $25,000 by our sponsor, the company had no assets, tangible or intangible. The purchase price of the founder shares was determined by dividing the amount of cash contributed to us by the number of founder shares issued. If we increase or decrease the size of the offering pursuant to Rule 462(b) under the Securities Act, we will effect a stock dividend or share contribution back to capital, as applicable, immediately prior to the consummation of the offering in such amount as to maintain the ownership of our stockholders prior to this offering at 20% of our issued and outstanding shares of our common stock upon the consummation of this offering, such 20% ownership not including any private placement securities which may be owned
by or deemed to be beneficially owned by our initial stockholders or any securities issued upon conversion of working capital loans. Our initial stockholders will collectively own 20% of our issued and outstanding shares after this offering (assuming they do not purchase any units in this offering), such 20% ownership not including any private placement securities which may be owned by or deemed to be beneficially owned by our initial stockholders or any securities issued upon conversion of working capital loans.
The founder shares are identical to the shares of Class A common stock included in the units being sold in this offering, except that:
•
the founder shares are subject to certain transfer restrictions, as described in more detail below;
•
our initial stockholders have entered into a letter agreement with us, pursuant to which they have agreed to: (1) waive their redemption rights with respect to their founder shares, private placement shares and any public shares held by them in connection with the completion of our initial business combination; (2) waive their redemption rights with respect to their founder shares, private placement shares and any public shares held by them in connection with a stockholder vote to approve an amendment to our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we have not consummated our initial business combination within 24 months from the closing of this offering; and (3) waive their rights to liquidating distributions from the trust account with respect to any founder shares and private placement shares they hold if we fail to complete our initial business combination within 24 months from the closing of this offering (although they will be entitled to liquidating distributions from the trust account with respect to any public shares they hold if we fail to complete our initial business combination within the prescribed time frame). If we submit our initial business combination to our public stockholders for a vote, our initial stockholders have agreed, pursuant to such letter agreement (and our anchor investor has agreed, pursuant to a written agreement), to vote their founder shares, private placement shares and any public shares they hold in favor of our initial business combination. As a result, in addition to our initial stockholders founder shares and private placement shares, we would need 9,023,751, or 36.1%, of the 25,000,000 public shares sold in this offering to be voted in favor of our initial business combination (assuming all outstanding shares are voted and the over-allotment option is not exercised) in order to have such initial business combination approved; provided, however, that if the anchor investor acquires all of the 1,300,000 units for which it has expressed an interest in acquiring, then we would need 7,723,751 public shares sold in this offering but not held by the anchor
investor (30.9% of the 25,000,000 public shares sold in this offering) to be voted in favor of our initial business combination (assuming all outstanding shares are voted and the over-allotment option is not exercised) in order to have such initial business combination approved;
•
the founder shares are automatically convertible into shares of our Class A common stock at the time of our initial business combination on a one-for-one basis, subject to adjustment pursuant to certain anti-dilution rights, as described in more detail below; and
•
the founder shares are entitled to registration rights.
The founder shares purchased by PA 2 Co-Investment and Craig-Hallum and its affiliates are deemed underwriters’ compensation by FINRA pursuant to FINRA Rule 5110 and are subject to the restrictions imposed by that rule.
Transfer restrictions on founder
shares
Our initial stockholders have agreed not to transfer, assign or sell any of their founder shares until the earlier to occur of: (A) one year after the completion of our initial business combination; or (B) the date on which we complete a liquidation, merger, stock exchange, reorganization or other similar transaction after our initial business combination that results in all of our public stockholders having the right to exchange their shares of common stock for cash, securities or other property (except as described herein under “Principal Stockholders — Transfers of Founder Shares and Private Placement Securities”). Any permitted transferees would be subject to the same restrictions and other agreements of our initial stockholders with respect to any founder shares. We refer to such transfer restrictions throughout this prospectus as the lock-up.
Notwithstanding the foregoing, if the last reported sale price of our common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock 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, the founder shares will be released from the lock-up.
Founder shares conversion and anti-dilution rights
The shares of Class F common stock will automatically convert into shares of Class A common stock at the time of our initial business combination, or earlier at the option of the holder, on a one-for-one basis, subject to increase in respect of the issuance of certain securities, as provided herein. In the case that additional shares of Class A common stock, or equity-linked securities (as described herein), are issued or deemed issued in excess of the amounts sold in this offering and related to the closing of our initial business combination, the ratio at which shares of Class F common stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding shares of Class F common stock agree to waive such adjustment with
respect to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares of Class F common stock will equal, in the aggregate, 20% of the aggregate number of all shares of common stock outstanding upon the completion of this offering, plus the aggregate number of shares of Class A common stock and equity-linked securities issued or deemed issued in connection with our initial business combination (net of the number of shares of Class A common stock redeemed in connection with our initial business combination), excluding any shares or equity-linked securities issued, or to be issued, to any seller in our initial business combination.
Private placement securities
Our founders have committed to purchase 702,500 (or 777,500 if the underwriters’ over-allotment option is exercised in full) private placement units, consisting of one private placement share of Class A common stock and one-third of one private placement warrant to purchase one share of Class A common stock, for $10.00 per private placement unit, or an aggregate amount of $7,025,000 (or $7,775,000 if the underwriters’ over-allotment option is exercised in full), in a private placement that will close simultaneously with the closing of this offering. Each private placement warrant is exercisable to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment as provided herein. The purchase price of the private placement securities will be added to the proceeds from this offering to be held in the trust account. If we do not complete our initial business combination within 24 months from the closing of this offering, the proceeds of the sale of the private placement securities held in the trust account will be used to fund the redemption of our public shares (subject to the requirements of applicable law) and the private placement warrants will expire worthless. The private placement warrants will not be redeemable by us so long as they are held by our initial stockholders or their permitted transferees (except as described below under “Principal Stockholders — Transfers of Founder Shares and Private Placement Securities”). If the private placement warrants are held by holders other than our initial stockholders or their permitted transferees, the private placement warrants will be redeemable by us and exercisable by the holders on the same basis as the warrants included in the units being sold in this offering. Our initial stockholders, as well as their permitted transferees, have the option to exercise the private placement warrants on a cashless basis.
Our initial stockholders are waiving their redemption rights with respect to the private placement shares held by them, if any, in connection with the completion of an initial business combination.
With respect to private placement warrants held by PA 2 Co-Investment and Craig-Hallum and their respective affiliates, they will not be exercisable more than five years from the commencement of sales of the offering in accordance with FINRA Rule 5110(g)(8). If the private placement warrants are held by holders other than the initial stockholders or their
permitted transferees, the private placement warrants will be redeemable by us in all redemption scenarios and exercisable by the holders on the same basis as the warrants included in the units being sold in this offering.
The private placement warrants purchased by PA 2 Co-Investment and Craig-Hallum and its affiliates are deemed underwriters’ compensation by FINRA pursuant to FINRA Rule 5110 and are subject to the restrictions imposed by that rule.
Transfer restrictions on private placement securities
The private placement securities (including the Class A common stock issuable upon exercise of the private placement warrants) will not be transferable, assignable or salable until 30 days after the completion of our initial business combination.
A certain qualified institutional buyer, which we refer to as the “anchor investor,” has expressed to usan interest to purchase up to 1,300,000 units in the aggregate in this offering. The anchor investor has subscribed for membership interests in our sponsor representing an indirect beneficial interest in up to 184,890 founder shares and 25,977 private placement units (or up to 212,621 founder shares and 28,750 private placement units if the underwriters’ over-allotment option is exercised in full).
The price paid by the anchor investor for the aforementioned indirect ownership of our founder shares and private placement units is the same, proportionally, as that paid by the other members of our sponsor, collectively, for the rest of such membership interests (excluding interests held directly by members of our management, directors and advisors outside of their interests in our sponsor).
There can be no assurance that the anchor investor will acquire any units in this offering, or as to the amount of such units the anchor investor will retain, if any, prior to or upon the consummation of our initial business combination. In the event that the anchor investor purchases such units (either in this offering or after), it has agreed to vote any shares that it holds (including any public shares that it holds) in favor of our initial business combination, and a smaller portion of affirmative votes from other public shareholders would be required to approve our initial business combination. As a result of the private placement units that our anchor investor holds, it may have different interests with respect to a vote on an initial business combination than other public stockholders.
Our anchor investor will not have any rights to the funds held in the trust account beyond the rights afforded to our public stockholders, as described herein.
Proceeds to be held in trust account
Nasdaq listing rules provide that at least 90% of the gross proceeds from this offering and the sale of the private placement securities be deposited in a trust account. Of the $257,025,000 in proceeds we will receive from this offering and the sale of the private placement securities described in this prospectus, or
$295,275,000 if the underwriters’ over-allotment option is exercised in full, $250,000,000 ($10.00 per unit), or $287,500,000 ($10.00 per unit) if the underwriters’ over-allotment option is exercised in full (including the fee payable to our underwriters pursuant to the Business Combination Marketing Agreement described under “Underwriting — Business Combination Marketing Agreement,” which fee we refer to throughout this prospectus as the “Marketing Fee,” of $8,750,000 (or up to $10,062,500 if the underwriters’ over-allotment option is exercised in full)), will be deposited into a U.S.-based trust account with Continental Stock Transfer & Trust Company acting as trustee, $2,025,000 will be used to pay expenses in connection with the closing of this offering and for working capital following this offering, and the balance will be paid to the underwriters as the underwriters fees payable in connection with this offering. The funds in the trust account will be invested only in specified U.S. government treasury bills or in specified money market funds.
Except with respect to interest earned on the funds held in the trust account that may be released to us to pay our franchise and income tax obligations, the funds held in the trust account will not be released from the trust account until the earliest of: (1) the completion of our initial business combination; (2) the redemption of any public shares properly tendered in connection with a stockholder vote to amend our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering; and (3) the redemption of all of our public shares if we are unable to complete our initial business combination within 24 months from the closing of this offering, subject to applicable law. 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.
Anticipated expenses and funding sources
Except as described above with respect to the payment of taxes, unless and until we complete our initial business combination, no proceeds held in the trust account will be available for our use, except the withdrawal of interest to pay taxes. The proceeds held in the trust account will be invested only in U.S. government securities with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations. We will disclose in each quarterly and annual report filed with the SEC prior to our initial business combination whether the proceeds deposited in the trust account are invested in U.S. government treasury obligations or money market funds or a combination thereof. Based upon current interest rates, we expect the trust account to generate approximately $250,000 of interest annually (assuming an interest rate of 0.1% per year); however, this is an estimate and we can provide no assurances regarding this amount. Unless
and until we complete our initial business combination, we may pay our expenses only from:
•
the net proceeds of this offering and the sale of the private placement securities not held in the trust account, which will be approximately $1,025,000 in working capital after the payment of approximately $1,000,000 in expenses relating to this offering;
•
any interest earned from the trust account, net of taxes payable (provided that this interest shall only be used to pay our franchise and income tax obligations); and
•
any loans or additional investments from our sponsor, members of our management team or any of their affiliates or other third parties, although they are under no obligation to loan funds or invest in us, and provided that any such loans will not have any claim on the proceeds held in the trust account. If we complete our initial business combination, we expect to repay such loaned amounts out of the proceeds of the trust account released to us. Otherwise, such loans would be repaid only out of funds held outside the trust account. Up to $1,500,000 of all loans made to us may be convertible at the time of the business combination and at the option of the lender at a price of $10.00 per unit into units consisting of one share of Class A common stock and one-third of one warrant to purchase one share of Class A common stock at a price of $11.50 per share. The units would be identical to the private placement units issued to our founders. PA 2 Co-Investment and Craig-Hallum, and their respective affiliates, will not provide any such working capital loans or receive any such units into which such loans are convertible.
Conditions to completing our initial business combination
There is no limitation on our ability to raise funds privately or through loans in connection with our initial business combination. Nasdaq listing rules require that our initial business combination must be with one or more target businesses that together have an aggregate fair market value equal to at least 80% of the value of the trust account (excluding any deferred underwriters fees, if any, and taxes payable on the income earned on the trust account) at the time of our signing a definitive agreement in connection with our initial business combination.
If our board of directors is not able to independently determine the fair market value of the target business or businesses, we will obtain an opinion from an independent investment banking firm that is a member of FINRA, or from an independent accounting firm. We will complete our initial business combination only if the post-transaction company in which our public stockholders own shares will own or acquire 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act.
Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to our initial business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in our initial business combination transaction. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be taken into account for purposes of the 80% of net assets test; provided that in the event that our initial business combination involves more than one target business, the 80% of net assets test will be based on the aggregate value of all of the target businesses.
Permitted purchases of public shares and public warrants by our
affiliates
If we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our initial stockholders, directors, officers or any of their affiliates may purchase shares or public warrants in privately negotiated transactions or in the open market either prior to or following the completion of our initial business combination. Please see “Proposed Business — Permitted purchases of our securities” for a description of how such persons will determine from which stockholders to seek to acquire securities. There is no limit on the number of shares such persons may purchase, or any restriction on the price that they may pay. Any such price per share may be different than the amount per share a public stockholder would receive if it elected to redeem its shares in connection with our initial business combination. However, such persons have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. In the event our initial stockholders, directors, officers or any of their affiliates determine to make any such purchases at the time of a stockholder vote relating to our initial business combination, such purchases could have the effect of influencing the vote necessary to approve such transaction. None of the funds in the trust account will be used to purchase shares or public warrants in such transactions. If they engage in such transactions, they will not make any such purchases when they are in possession of any material non-public information not disclosed to the seller or if such purchases are prohibited by Regulation M under the Exchange Act. Subsequent to the consummation of this offering, we will adopt an insider trading policy which will require insiders to: (1) refrain from purchasing securities during certain blackout periods and when they are in possession of any material non-public information; and (2) to clear all trades with our legal counsel prior to execution. We cannot currently determine whether our insiders will make such purchases pursuant to a Rule 10b5-1 plan, as it will be dependent upon several factors, including but not limited to, the timing and size of such purchases. Depending on such circumstances, our
insiders may either make such purchases pursuant to a Rule 10b5-1 plan or determine that such a plan is not necessary.
We do not currently anticipate that such purchases, if any, would constitute a tender offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private rules under the Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject to such rules, the purchasers will comply with such rules. None of our initial stockholders or any of their affiliates will make any purchases if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act.
We expect any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchasers are subject to such reporting requirements. None of the funds held in the trust account will be used to purchase shares or public warrants in such transactions prior to completion of our initial business combination. See “Proposed Business — Permitted purchases of our securities” for a description of how our initial stockholders or any of their affiliates will select which stockholders to purchase securities from in any private transaction.
The purpose of any such purchases of shares could be to vote such shares in favor of the initial business combination and thereby increase the likelihood of obtaining stockholder approval of the initial business combination or to satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial business combination, where it appears that such requirement would otherwise not be met. 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 warrantholders for approval in connection with our initial business combination. Any such purchases of our securities may result in the completion of our initial business combination that may not otherwise have been possible. In addition, if such purchases are made, the public “float” of our shares of Class A common stock or warrants may be reduced and the number of beneficial holders of our securities may be reduced, which may make it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange.
Redemption rights for public stockholders upon completion of our initial business combination
We will provide our public stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of our initial business combination at a per share price, payable in cash, equal to the aggregate amount then on deposit in the trust account as of two business days prior to the consummation of our initial business combination, including interest earned on the funds held in the trust account and not previously released to us to pay our franchise and
income taxes, divided by the number of then outstanding public shares, subject to the limitations described herein. The amount in the trust account is initially anticipated to be $10.00 per public share. The per share amount we will distribute to investors who properly redeem their shares will not be reduced by the Marketing Fee we will pay to the underwriters. There will be no redemption rights upon the completion of our initial business combination with respect to our warrants. Our initial stockholders have entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares, private placement shares and any public shares held by them in connection with the completion of our initial business combination.
Manner of conducting redemptions
We will provide our public stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of our initial business combination either: (1) in connection with a stockholder meeting called to approve the business combination; or (2) by means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed business combination or conduct a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would require us to seek stockholder approval under applicable law or stock exchange listing requirement. Asset acquisitions and stock purchases would not typically require stockholder approval while direct mergers with our company where we do not survive and any transactions where we issue more than 20% of our outstanding common stock or seek to amend our amended and restated certificate of incorporation would typically require stockholder approval. We intend to conduct redemptions without a stockholder vote pursuant to the tender offer rules of the SEC unless stockholder approval is required by applicable law or stock exchange rules or we choose to seek stockholder approval for business or other reasons.
If a stockholder vote is not required and we do not decide to hold a stockholder vote for business or other reasons, we will, pursuant to our amended and restated certificate of incorporation:
•
conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers; and
•
file tender offer documents with the SEC prior to completing our initial business combination which contain substantially the same financial and other information about the initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies.
Upon the public announcement of our initial business combination, if we elect to conduct redemptions pursuant to the tender offer rules, we and our sponsor will terminate any
plan established in accordance with Rule 10b5-1 to purchase shares of our Class A common stock in the open market, in order to comply with Rule 14e-5 under the Exchange Act.
In the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial business combination until the expiration of the tender offer period. In addition, the tender offer will be conditioned on public stockholders not tendering more than a specified number of public shares, which number will be based on the requirement that we may not redeem public shares in an amount that would cause our net tangible assets to be less than $5,000,001, after payment of the Marketing Fee (so that we do not then become subject to the SEC’s “penny stock” rules), or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination. If public stockholders tender more shares than we have offered to purchase, we will withdraw the tender offer and not complete such initial business combination.
If, however, stockholder approval of the transaction is required by applicable law or stock exchange rules or we decide to obtain stockholder approval for business or other reasons, we will:
•
conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer rules; and
•
file proxy materials with the SEC.
We expect that a final proxy statement would be mailed to public stockholders at least 10 days prior to the stockholder vote. However, we expect that a draft proxy statement would be made available to such stockholders well in advance of such time, providing additional notice of redemption if we conduct redemptions in conjunction with a proxy solicitation. Although we are not required to do so, we currently intend to comply with the substantive and procedural requirements of Regulation 14A in connection with any stockholder vote even if we are not able to maintain our Nasdaq listing or Exchange Act registration.
If we seek stockholder approval, we will complete our initial business combination only if a majority of the outstanding shares of common stock voted are voted in favor of the business combination. In such case, pursuant to the terms of a letter agreement entered into with us, our initial stockholders have agreed (and their permitted transferees will agree) (and our anchor investor has agreed, pursuant to a written agreement) to vote their founder shares, private placement shares and any public shares held by them in favor of our initial business combination. We expect that at the time of any stockholder vote relating to our initial business combination, our initial
stockholders and their permitted transferees will own at least 20% of our outstanding shares of common stock entitled to vote thereon (such 20% ownership not including any private placement securities which may be owned by or deemed to be beneficially owned by our initial stockholders or any securities issued upon conversion of working capital loans). Our directors and officers also have agreed to vote in favor of our initial business combination with respect to public shares acquired by them, if any. These voting thresholds, and the voting agreements of our initial stockholders, may make it more likely that we will consummate our initial business combination. Each public stockholder may elect to redeem their public shares without voting, and if they do vote, irrespective of whether they vote for or against the proposed transaction.
Our amended and restated certificate of incorporation will provide that 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 (so that we do not then become subject to the SEC’s “penny stock” rules). Redemptions of our public shares may also be subject to a higher net tangible asset test or cash requirement pursuant to an agreement relating to our initial business combination. For example, the proposed business combination may require: (1) cash consideration to be paid to the target or its owners; (2) cash to be transferred to the target for working capital or other general corporate purposes; or (3) the retention of cash to satisfy other conditions in accordance with the terms of the proposed business combination. In the event the aggregate cash consideration we would be required to pay for all shares of common stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of cash available to us, we will not complete the business combination or redeem any shares, and all shares of common stock submitted for redemption will be returned to the holders thereof.
Tendering share certificates in connection with a tender offer or redemption rights
We may require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to either tender their certificates to our transfer agent prior to the date set forth in the tender offer documents or proxy materials mailed to such holders, or up to two business days prior to the vote on the proposal to approve our initial business combination in the event we distribute proxy materials, or to deliver their shares to the transfer agent electronically using The Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s option, rather than simply voting against the initial business combination. The tender offer or proxy materials, as applicable, that we will furnish to holders of our public shares in connection with our initial business combination will indicate whether we are requiring public stockholders to satisfy such delivery requirements.
Limitation on redemption rights of stockholders holding more than 15% of the shares sold in this offering if we hold stockholder vote
Notwithstanding the foregoing redemption rights, if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation will provide that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from redeeming its shares with respect to more than an aggregate of 15% of the shares sold in this offering, without our prior consent. We believe the restriction described above will discourage stockholders from accumulating large blocks of shares and subsequent attempts by such holders to use their ability to redeem their shares as a means to force us or our founders or their affiliates to purchase their shares at a significant premium to the then-current market price or on other undesirable terms. Absent this provision, a public stockholder holding more than an aggregate of 15% of the shares sold in this offering could threaten to exercise its redemption rights against a business combination if such holder’s shares are not purchased by us or our founders or their affiliates at a premium to the then-current market price or on other undesirable terms. By limiting our stockholders’ ability to redeem to no more than 15% of the shares sold in this offering, we believe we will limit the ability of a small group of stockholders to unreasonably attempt to block our ability to complete our initial business combination, particularly in connection with a business combination with a target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. However, we would not be restricting our stockholders’ ability to vote all of their shares (including all shares held by those stockholders that hold more than 15% of the shares sold in this offering) for or against our initial business combination.
Redemption rights in connection with proposed amendments to our certificate of incorporation
Some other special purpose acquisition companies have a provision in their charter which prohibits the amendment of certain charter provisions. Our amended and restated certificate of incorporation will provide that any of its provisions related to pre-business combination activity (including the requirement to deposit proceeds of this offering and the private placement securities into the trust account and not release such amounts except in specified circumstances) may be amended if approved by holders of at least 65% of our common stock who attend and vote in a stockholder meeting, and corresponding provisions of the trust agreement governing the release of funds from our trust account may be amended if approved by holders of 65% of our common stock. In all other instances, our amended and restated certificate of incorporation will provide that it may be amended by holders
of a majority of our common stock, subject to applicable provisions of the DGCL, or applicable stock exchange rules. Our initial stockholders, who will beneficially own 20% of our common stock upon the closing of this offering (assuming they do not purchase any units in this offering and such 20% ownership not including any private placement securities which may be owned by or deemed to be beneficially owned by our initial stockholders or any securities issued upon conversion of working capital loans), may participate in any vote to amend our amended and restated certificate of incorporation and/or trust agreement and will have the discretion to vote in any manner they choose. Our initial stockholders have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering, unless we provide our public stockholders with the opportunity to redeem their shares of common stock upon approval of any such amendment 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 our franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares. Our initial stockholders have entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares, private placement shares and any public shares held by them in connection with the completion of our initial business combination.
Release of funds in trust account on closing of our initial business combination
On the completion of our initial business combination, all amounts held in the trust account will be released to us. We will use these funds to pay amounts due to any public stockholders who exercise their redemption rights as described above under “Redemption rights for public stockholders upon completion of our initial business combination,” to pay the underwriters their Marketing Fee, to pay all or a portion of the consideration payable to the target or owners of the target of our initial business combination and to pay other expenses associated with our initial business combination, including the Marketing Fee. If our initial business combination is paid for using equity or debt securities or not all of the funds released from the trust account are used for payment of the consideration in connection with our initial business combination or used for redemption of our public shares, we may apply the balance of the cash released to us from the trust account for general corporate purposes, including for maintenance or expansion of operations of post-transaction businesses, the payment of principal or interest due on
indebtedness incurred in completing our initial business combination, to fund the purchase of other companies or for working capital.
Redemption of public shares and distribution and liquidation if no initial business combination
Our amended and restated certificate of incorporation provides that we will have only 24 months from the closing of this offering to complete our initial business combination. If we are unable to complete our initial business combination within such 24-month period, we will: (1) cease all operations except for the purpose of winding up; (2) as promptly as reasonably possible but not more than 10 business days thereafter, 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 us to pay our franchise and income taxes (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 liquidating distributions, if any), subject to applicable law; and (3) as promptly as reasonably possible following such redemption, 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. There will be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless if we fail to complete our initial business combination within the 24-month time period.
Our initial stockholders have entered into a letter agreement with us, pursuant to which they have waived their rights to liquidating distributions from the trust account with respect to their founder shares and private placement shares if we fail to complete our initial business combination within 24 months from the closing of this offering. However, if our initial stockholders acquire public shares, they will be entitled to liquidating distributions from the trust account with respect to such public shares if we fail to complete our initial business combination within the allotted 24-month time period. The underwriters have agreed to waive their rights to the Marketing Fee held in the trust account in the event we do not complete our initial business combination within 24 months from the closing of this offering and, in such event, such amount will be included with the funds held in the trust account that will be available to fund the redemption of our public shares.
Our initial stockholders have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering, unless we provide our public stockholders with
the opportunity to redeem their shares of Class A common stock upon approval of any such amendment 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 us to pay our franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares. However, we may not redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that we do not then become subject to the SEC’s “penny stock” rules).
Limited payments to insiders
There will be no finder’s fees, reimbursements or cash payments made to our founders, officers or directors, or our or any of their affiliates, for services rendered to us prior to or in connection with the completion of our initial business combination, other than the following payments, none of which will be made from the proceeds of this offering and the sale of the private placement securities held in the trust account prior to the completion of our initial business combination:
•
repayment of an aggregate of up to $300,000 in loans made to us by our sponsor to cover offering-related and organizational expenses;
•
payment to our sponsor of a total of $20,000 per month, for up to 24 months, for office space, utilities, general office and secretarial support, and administrative and support services;
•
reimbursement for any out-of-pocket expenses related to identifying, investigating, negotiating and completing an initial business combination;
•
payment to the underwriters of their underwriting discount, Marketing Fee, fees for any financial advisory, placement agency or other similar investment banking services that they or their affiliates may provide to us in the future, and reimbursement of the underwriters for any out-of-pocket expenses incurred by them in connection with the performance of such services; and
•
repayment of loans which may be made by our sponsor or affiliates of our sponsor or certain of our officers and directors to finance working capital or transaction costs in connection with an intended initial business combination, the terms of which have not been determined nor have any written agreements been executed with respect thereto. Up to $1,500,000 of such loans may be convertible at the time of the business combination and at the option of the lender at a price of $10.00 per unit into units consisting of one share of Class A common stock and one-third of one warrant to purchase one share of Class A common stock at a price of $11.50 per share. PA 2 Co-Investment and Craig-Hallum, and their respective affiliates, will not provide any such working
capital loans or receive any such securities into which such loans are convertible.
These payments may be funded using the net proceeds of this offering and the sale of the private placement securities not held in the trust account or, upon completion of the initial business combination, from any amounts remaining from the proceeds of the trust account released to us in connection therewith.
Our audit committee will review on a quarterly basis all payments that were made to our founders, officers or directors, or our or any of their affiliates.
Prior to the effectiveness of this registration statement, we will have established and will maintain an audit committee to, among other things, monitor compliance with the terms described above and the other terms relating to this offering. If any noncompliance is identified, then the audit committee will be charged with the responsibility to promptly take all action necessary to rectify such noncompliance or otherwise to cause compliance with the terms of this offering. For more information, see the section entitled “Management — Committees of the Board of Directors — Audit Committee.”
Summary of Risk Factors
Our business is subject to numerous risks and uncertainties, including those highlighted in the section titled “Risk Factors,” that represent challenges that we face in connection with the successful implementation of our strategy. The occurrence of one or more of the events or circumstances described in the section titled “Risk Factors,” alone or in combination with other events or circumstances, may adversely affect our ability to effect a business combination, and may have an adverse effect on our business, cash flows, financial condition and results of operations. Such risks include, but are not limited to:
•
We are a newly formed company without an operating history;
•
Stockholders may lack the opportunity to vote on our proposed business combination;
•
Holders of our securities lack protections normally afforded to investors of blank check companies;
•
The fact that there may be a deviation from our acquisition criteria;
•
Our potential issuance of equity and/or debt securities to complete a business combination;
•
The potential for third-party claims that have the effect of reducing the per-share redemption price;
•
The potential for our stockholders being held liable for claims by third parties against us;
•
We may be unable to enforce our sponsor’s indemnification obligations;
•
The ability of security holders to obtain a favorable judicial forum for disputes with our company;
•
Our dependence on key personnel;
•
Potential conflicts of interest involving of our sponsor, officers and directors;
•
The potential of the delisting of our securities by Nasdaq;
•
If shares of ours are redeemed and warrants expire worthless;
•
The fact that our competitors may have advantages over us in seeking a business combinations;
•
Our ability or inability to obtain additional financing;
•
Our initial stockholders controlling a substantial interest in us;
•
The potential that warrants we issue might have an adverse effect on the market price of our Class A common stock;
•
Redemptions of warrants at disadvantageous times for holders;
•
Our grant of registration rights’ having an adverse effect on the market price of our Class A common stock;
•
The impact of COVID-19 and related risks; and
•
The potential for changes in laws or regulations.
You should carefully consider these and the other risks set forth in the section entitled “Risk Factors” beginning on page 36 of this prospectus.
Summary financial data
The following table summarizes the relevant financial data for our business and should be read with our financial statements, which are included in this prospectus. We have not had any significant operations to date, so only balance sheet data is presented.
| |
|
|
October 15, 2020
|
|
|
Balance Sheet Data:
|
|
|
|
Working capital (deficiency)
|
|
|
|
$ |
(99,614) |
|
|
|
Total assets
|
|
|
|
$ |
139,592 |
|
|
|
Total liabilities
|
|
|
|
$ |
124,614 |
|
|
|
Stockholder's equity
|
|
|
|
$ |
14,978 |
|
|
If our initial business combination is not completed within 24 months from the closing of this offering, the proceeds then on deposit in the trust account, including interest earned on the funds held in the trust account and not previously released to us to pay our franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses), will be used to fund the redemption of our public shares. Our initial stockholders have entered into a letter agreement with us, pursuant to which they have agreed to waive their rights to liquidating distributions from the trust account with respect to their founder shares and private placement shares if we fail to complete our initial business combination within such 24-month time period (although they will be entitled to liquidating distributions from the trust account with respect to any public shares they hold if we fail to complete our initial business combination within the prescribed time frame).
RISK FACTORS
An investment in our securities involves a high degree of risk. You should consider carefully all of the risks described below, together with the other information contained in this prospectus, before making a decision to invest in our units. If any of the following events occur, our business, financial condition and operating results may be materially adversely affected. In that event, the trading price of our securities could decline, and you could lose all or part of your investment.
Risks Related to the Process of Consummating a Business Combination and Post-Business Combination Risks
Our public stockholders may not be afforded an opportunity to vote on our proposed initial business combination, which means we may complete our initial business combination even though a majority of our public stockholders do not support such a combination.
We may not hold a stockholder vote to approve our initial business combination unless the business combination would require stockholder approval under applicable law or stock exchange listing requirements or if we decide to hold a stockholder vote for business or other reasons. For instance, the Nasdaq rules currently allow us to engage in a tender offer in lieu of a stockholder meeting but would still require us to obtain stockholder approval if we were seeking to issue more than 20% of our outstanding shares to a target business as consideration in any business combination. Therefore, if we were structuring a business combination that required us to issue more than 20% of our outstanding shares, we would seek stockholder approval of such business combination. However, except as required by applicable law or stock exchange rules, the decision as to whether we will seek stockholder approval of a proposed business combination or will allow stockholders to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors, such as the timing of the transaction and whether the terms of the transaction would otherwise require us to seek stockholder approval. Accordingly, we may consummate our initial business combination even if holders of a majority of the outstanding shares of our common stock do not approve of the business combination we consummate. Please see the section entitled “Proposed Business — Stockholders May Not Have the Ability to Approve Our Initial Business Combination” for additional information.
If we seek stockholder approval of our initial business combination, our initial stockholders have agreed to vote in favor of such initial business combination, regardless of how our public stockholders vote.
Our initial stockholders have agreed (and their permitted transferees will agree), pursuant to the terms of a letter agreement entered into with us (and our anchor investor has agreed, pursuant to a written agreement), to vote their founder shares, private placement shares and any public shares held by them in favor of our initial business combination. As a result, in addition to our initial stockholders founder shares and private placement shares, we would need 9,023,751, or 36.1%, of the 25,000,000 public shares sold in this offering to be voted in favor of our initial business combination (assuming all outstanding shares are voted and the over-allotment option is not exercised) in order to have such initial business combination approved; provided, however, that if the anchor investor acquires all of the 1,300,000 units for which it has expressed an interest in acquiring, then we would need 7,723,751 public shares sold in this offering but not held by the anchor investor (30.9% of the 25,000,000 public shares sold in this offering) to be voted in favor of our initial business combination (assuming all outstanding shares are voted and the over-allotment option is not exercised) in order to have such initial business combination approved. We expect that our initial stockholders and their permitted transferees will own at least 20% of our outstanding shares of common stock at the time of any such stockholders vote, such 20% ownership not including any private placement securities which may be owned by or deemed to be beneficially owned by our initial stockholders or any securities issued upon conversion of working capital loans. Accordingly, if we seek stockholders’ approval of our initial business combination, it is more likely that the necessary stockholders approval will be received than would be the case if such persons agreed to vote their founder shares and private placement shares in accordance with the majority of the votes cast by our public stockholders.
Your only opportunity to affect the investment decision regarding a potential business combination will be limited to the exercise of your right to redeem your shares from us for cash, unless we seek stockholder approval of such business combination.
At the time of your investment in us, you will not be provided with an opportunity to evaluate the specific merits or risks of our initial business combination. Additionally, since our board of directors may
complete a business combination without seeking stockholder approval, public stockholders may not have the right or opportunity to vote on the business combination, unless we seek such stockholder vote. Accordingly, if we do not seek stockholder approval, your only opportunity to affect the investment decision regarding a potential business combination may be limited to exercising your redemption rights within the period of time (which will be at least 20 business days) set forth in our tender offer documents mailed to our public stockholders in which we describe our initial business combination.
The ability of our public stockholders to redeem their shares for cash may make our financial condition unattractive to potential business combination targets, which may make it difficult for us to enter into a business combination with a target.
We may seek to enter into a business combination transaction agreement with a prospective target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. If too many public stockholders exercise their redemption rights, we would not be able to meet such closing condition and, as a result, would not be able to proceed with the business combination. Furthermore, in no event will we redeem our public shares in an amount that would cause our net tangible assets, after payment of the Marketing Fee, to be less than $5,000,001 (so that we do not then become subject to the SEC’s “penny stock” rules), or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination. Consequently, if accepting all properly submitted redemption requests would cause our net tangible assets to be less than $5,000,001 or such greater amount necessary to satisfy a closing condition as described above, we would not proceed with such redemption and the related business combination and may instead search for an alternate business combination. Prospective targets will be aware of these risks and, thus, may be reluctant to enter into a business combination transaction with us.
The ability of our public stockholders to exercise redemption rights with respect to a large number of our shares may not allow us to complete the most desirable business combination or optimize our capital structure.
At the time we enter into an agreement for our initial business combination, we will not know how many stockholders may exercise their redemption rights and, therefore, we will need to structure the transaction based on our expectations as to the number of shares that will be submitted for redemption. If our initial business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price or requires us to have a minimum amount of cash at closing, we will need to reserve a portion of the cash in the trust account to meet such requirements or arrange for third-party financing. In addition, if a larger number of shares is submitted for redemption than we initially expected, we may need to restructure the transaction to reserve a greater portion of the cash in the trust account or arrange for third party financing. Raising additional third-party financing may involve dilutive equity issuances or the incurrence of indebtedness at higher than desirable levels. The above considerations may limit our ability to complete the most desirable business combination available to us or optimize our capital structure. The amount of the Marketing Fee payable to the underwriters will not be adjusted for any shares that are redeemed in connection with an initial business combination. The per-share amount we will distribute to stockholders who properly exercise their redemption rights will not be reduced by the Marketing Fee and after such redemptions, the per-share value of shares held by non-redeeming stockholders will reflect our obligation to pay the Marketing Fee.
The ability of our public stockholders to exercise redemption rights with respect to a large number of our shares could increase the probability that our initial business combination would be unsuccessful and that you would have to wait for liquidation in order to redeem your stock.
If our initial business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price, or requires us to have a minimum amount of cash at closing, the probability that our initial business combination would be unsuccessful increases. If our initial business combination is unsuccessful, you would not receive your pro rata portion of the trust account until we liquidate the trust account. If you are in need of immediate liquidity, you could attempt to sell your stock in the open market; however, at such time our stock may trade at a discount to the pro rata amount per share in the trust account. In either situation, you may suffer a material loss on your investment or lose the benefit of funds expected in connection with our redemption until we liquidate or you are able to sell your stock in the open market.
The requirement that we complete our initial business combination within the prescribed time frame may give potential target businesses leverage over us in negotiating a business combination and may limit the time we have in which to conduct due diligence on potential business combination targets, in particular as we approach our dissolution deadline, which could undermine our ability to complete our initial business combination on terms that would produce value for our stockholders.
Any potential target business with which we enter into negotiations concerning a business combination will be aware that we must complete our initial business combination within 24 months from the closing of this offering. Consequently, such target business may obtain leverage over us in negotiating a business combination, knowing that if we do not complete our initial business combination with that particular target business, we may be unable to complete our initial business combination with any target business. This risk will increase as we get closer to the end of the 24-month period. In addition, we may have limited time to conduct due diligence and may enter into our initial business combination on terms that we would have rejected upon a more comprehensive investigation.
Our search for a business combination, and any target business with which we ultimately consummate a business combination, may be materially adversely affected by the coronavirus (COVID-19) outbreak and the status of debt and equity markets.
In December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China, which has and is continuing to spread throughout China and other parts of the world, including the United States. On January 30, 2020, the World Health Organization declared the outbreak of COVID-19 a “Public Health Emergency of International Concern.” On January 31, 2020, U.S. Health and Human Services Secretary Alex M. Azar II declared a public health emergency for the United States to aid the U.S. healthcare community in responding to COVID-19, and on March 11, 2020 the World Health Organization characterized the outbreak as a “pandemic”. The COVID-19 outbreak has resulted in a widespread health crisis that has adversely affected economies and financial markets worldwide, and the business of any potential target business with which we consummate a business combination could be, or may already have been, materially and adversely affected. Furthermore, we may be unable to complete a business combination if concerns relating to COVID-19 continue to restrict travel, limit the ability to have meetings with potential investors or the target company’s personnel, vendors and services providers are unavailable to negotiate and consummate a transaction in a timely manner. The extent to which COVID-19 impacts our search for a business combination will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others. If the disruptions posed by COVID-19 or other matters of global concern continue for an extensive period of time, our ability to consummate a business combination, or the operations of a target business with which we ultimately consummate a business combination, may be materially adversely affected. In addition, our ability to consummate a transaction may be dependent on the ability to raise equity and debt financing which may be impacted by COVID-19 and other events, including as a result of increased market volatility, decreased market liquidity and third-party financing being unavailable on terms acceptable to us or at all.
We may not be able to complete our initial business combination within the prescribed time frame, in which case we would cease all operations except for the purpose of winding up and we would redeem our public shares and liquidate, in which case our public stockholders may receive only $10.00 per share, or less than such amount in certain circumstances, and our warrants will expire worthless.
Our amended and restated certificate of incorporation provides that we must complete our initial business combination within 24 months from the closing of this offering. We may not be able to find a suitable target business and complete our initial business combination within such time period. Our ability to complete our initial business combination may be negatively impacted by general market conditions, volatility in the capital and debt markets and the other risks described herein. For example, the outbreak of COVID-19 continues to grow both in the U.S. and globally and, while the extent of the impact of the outbreak on us will depend on future developments, it could limit our ability to complete our initial business combination, including as a result of increased market volatility, decreased market liquidity and third-party financing being unavailable on terms acceptable to us or at all. Additionally, the outbreak of COVID-19 may negatively impact businesses with which we may seek to conduct an initial business combination.
If we have not completed our initial business combination within such time period, we will: (1) cease all operations except for the purpose of winding up; (2) as promptly as reasonably possible but not more than 10 business days thereafter, 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 us to pay our franchise and income taxes (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 liquidating distributions, if any), subject to applicable law; and (3) as promptly as reasonably possible following such redemption, 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 case, our public stockholders may receive only $10.00 per share, or less than $10.00 per share, on the redemption of their shares, and our warrants will expire worthless. See “— If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per share redemption amount received by stockholders may be less than $10.00 per share” and other risk factors herein.
If we seek stockholder approval of our initial business combination, our founders, directors, officers or any of their affiliates may elect to purchase shares or warrants from public stockholders, which may influence a vote on a proposed business combination and reduce the public “float” of our Class A common stock.
If we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our founders, directors, officers or any of their affiliates may purchase shares or public warrants or a combination thereof in privately negotiated transactions or in the open market either prior to or following the completion of our initial business combination, although they are under no obligation to do so. Please see “Proposed Business — Permitted purchases of our securities” for a description of how such persons will determine from which stockholders to seek to acquire shares or warrants. Such a purchase may include a contractual acknowledgement that such public stockholder, although still the record holder of our shares is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that our founders, directors, officers or any of their affiliates purchase shares in privately negotiated transactions from public stockholders who have already elected to exercise their redemption rights, such selling public stockholders would be required to revoke their prior elections to redeem their shares. The price per share paid in any such transaction may be different than the amount per share a public stockholder would receive if it elected to redeem its shares in connection with our initial business combination. The purpose of such purchases could be to vote such shares in favor of the business combination and thereby increase the likelihood of obtaining stockholder approval of our initial business combination or to satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial business combination, where it appears that such requirement would otherwise not be met. 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 warrantholders for approval in connection with our initial business combination. Any such purchases of our securities may result in the completion of our initial business combination that may not otherwise have been possible. We expect any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchasers are subject to such reporting requirements.
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.
If a stockholder fails to receive notice of our offer to redeem our public shares in connection with our initial business combination, or fails to comply with the procedures for tendering its shares, such shares may not be redeemed.
We will comply with the tender offer rules or proxy rules, as applicable, when conducting redemptions in connection with our initial business combination. Despite our compliance with these rules, if a stockholder fails to receive our tender offer or proxy materials, as applicable, such stockholder may not become aware of the opportunity to redeem its shares. In addition, the tender offer documents or proxy materials, as
applicable, that we will furnish to holders of our public shares in connection with our initial business combination will describe the various procedures that must be complied with in order to validly tender or redeem public shares. For example, we may require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to either tender their certificates to our transfer agent prior to the date set forth in the tender offer documents mailed to such holders, or up to two business days prior to the vote on the proposal to approve the initial business combination in the event we distribute proxy materials, or to deliver their shares to the transfer agent electronically. In the event that a stockholder fails to comply with these or any other procedures, its shares may not be redeemed. See “Proposed Business — Tendering stock certificates in connection with a tender offer or redemption rights.”
Because of our limited resources and the significant competition for business combination opportunities, it may be more difficult for us to complete our initial business combination. If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share, or less in certain circumstances, on our redemption of their stock, and our warrants will expire worthless.
We expect to encounter intense competition from other entities having a business objective similar to ours, including private investors (which may be individuals or investment partnerships), other blank check companies and other entities, domestic and international, competing for the types of businesses with which we intend to conduct an initial business combination. Many of these individuals and entities are well-established and have extensive experience in identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing services to various industries. Many of these competitors possess greater technical, human and other resources or more local industry knowledge than we do and our financial resources will be relatively limited when contrasted with those of many of these competitors. While we believe there will be numerous target businesses with which we could potentially conduct an initial business combination with the net proceeds of this offering and the sale of the private placement securities, our ability to compete with respect to the business combination with certain target businesses that are sizable will be limited by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing a business combination with certain target businesses. Furthermore, in the event we seek stockholder approval of our initial business combination and we are obligated to pay cash for shares of our Class A common stock, it will potentially reduce the resources available to us for our initial business combination. Any of these obligations may place us at a competitive disadvantage in successfully negotiating a business combination. If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share, or less in certain circumstances, on the liquidation of our trust account and our warrants will expire worthless. See “— If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than $10.00 per share” and other risk factors herein.
If the funds not being held in the trust account are insufficient to allow us to operate for at least the 24 months following the closing of this offering, we may be unable to complete our initial business combination.
The funds available to us outside of the trust account may not be sufficient to allow us to operate for at least the 24 months following the closing of this offering, assuming that our initial business combination is not completed during that time. We expect to incur significant costs in pursuit of our business combination plans. Management’s plans to address this need for capital through this offering and potential loans from certain of our affiliates are discussed in the section of this prospectus titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” However, our affiliates are not obligated to make loans to us in the future, and we may not be able to raise additional financing from unaffiliated parties necessary to fund our expenses. Any such event in the future may negatively impact the analysis regarding our ability to continue as a going concern at such time.
We believe that, upon the closing of this offering, the funds available to us outside of the trust account, will be sufficient to allow us to operate for at least the 24 months following the closing of this offering; however, we cannot assure you that our estimate is accurate. Of the funds available to us, we could use a portion of the funds available to us to pay fees to consultants to assist us with our search for a target business. We could also use a portion of the funds as a down payment or to fund a “no-shop” provision (a provision in letters of intent or merger agreements designed to keep target businesses from “shopping” around for
transactions with other companies or investors on terms more favorable to such target businesses) with respect to a particular proposed business combination, although we do not have any current intention to do so. If we entered into a letter of intent or merger agreement where we paid for the right to receive exclusivity from a target business and were subsequently required to forfeit such funds (whether as a result of our breach or otherwise), we might not have sufficient funds to continue searching for, or conduct due diligence with respect to, a target business. If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share, or less in certain circumstances, on the liquidation of our trust account and our warrants will expire worthless. See “— If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than $10.00 per share” and other risk factors herein.
If the net proceeds of this offering and the sale of the private placement securities not being held in the trust account are insufficient, it could limit the amount available to fund our search for a target business or businesses and complete our initial business combination and we will depend on loans from our founders or management team to fund our search, to pay our taxes and to complete our initial business combination.
Of the net proceeds of this offering and the sale of the private placement securities, only approximately $1,025,000 will be available to us initially outside the trust account to fund our working capital requirements. In the event that our offering expenses exceed our estimate of $1,000,000, we may fund such excess with funds not to be held in the trust account. In such case, the amount of funds we intend to be held outside the trust account would decrease by a corresponding amount. Conversely, in the event that the offering expenses are less than our estimate of $1,000,000, the amount of funds we intend to be held outside the trust account would increase by a corresponding amount. The amount held in the trust account will not be impacted as a result of such increase or decrease. If we are required to seek additional capital, we would need to borrow funds from our sponsor, management team, advisors or other third parties to operate or may be forced to liquidate. Neither our sponsor, members of our management team, advisors nor any of their affiliates is under any obligation to loan funds to us in such circumstances. Any such loans would be repaid only from funds held outside the trust account or from funds released to us upon completion of our initial business combination. Up to $1,500,000 of such loans may be convertible at the time of the business combination and at the option of the lender at a price of $10.00 per unit into units consisting of one share of Class A common stock and one-third of one warrant to purchase one share of Class A common stock at a price of $11.50 per share. The units would be identical to the private placement units issued to our founders. PA 2 Co-Investment and Craig-Hallum, and their respective affiliates, will not provide any such working capital loans or receive any such units into which such loans are convertible. Prior to the completion of our initial business combination, we do not expect to seek loans from parties other than our sponsor, management team or their affiliates as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account. If we are unable to complete our initial business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account. In such case, our public stockholders may receive only $10.00 per share, or less in certain circumstances, and our warrants will expire worthless. See “— If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than $10.00 per share” and other risk factors herein.
If we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete our initial business combination.
If we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including:
•
restrictions on the nature of our investments; and
•
restrictions on the issuance of securities;
each of which may make it difficult for us to complete our initial business combination.
In addition, we may have imposed upon us burdensome requirements, including:
•
registration as an investment company with the SEC;
•
adoption of a specific form of corporate structure; and
•
reporting, record keeping, voting, proxy and disclosure requirements and compliance with other rules and regulations.
In order not to be regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that we are engaged primarily in a business other than investing, reinvesting or trading of securities and that our activities do not include investing, reinvesting, owning, holding or trading “investment securities” constituting more than 40% of our assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Our business will be to identify and complete a business combination and thereafter to operate the post-transaction business or assets for the long term. We do not plan to buy businesses or assets with a view to resale or profit from their resale. We do not plan to buy unrelated businesses or assets or to be a passive investor.
We do not believe that our anticipated principal activities will subject us to the Investment Company Act. To this end, the proceeds held in the trust account may be invested by the trustee only in U.S. government treasury bills with a maturity of 185 days or less or in money market funds investing solely in U.S. treasuries and meeting certain conditions under Rule 2a-7 under the Investment Company Act. Because the investment of the proceeds will be restricted to these instruments and by having a business plan targeted at acquiring and growing businesses for the long term (rather than on buying and selling businesses in the manner of a merchant bank or private equity fund), we intend to avoid being deemed an “investment company” within the meaning of the Investment Company Act.
This offering is not intended for persons who are seeking a return on investments in government securities or investment securities. The trust account is intended as a holding place for funds pending the earliest to occur of either: (i) the completion of our initial business combination; (ii) the redemption of any public shares properly tendered in connection with a stockholder vote to amend our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering; and (iii) absent an initial business combination within 24 months from the closing of this offering or with respect to any other material provisions relating to stockholders’ rights or pre-initial business combination activity, our return of the funds held in the trust account to our public stockholders as part of our redemption of the public shares.
If we do not invest the proceeds as discussed above, we may be deemed to be subject to the Investment Company Act. If we were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require additional expenses for which we have not allotted funds and may hinder our ability to consummate our initial business combination. If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share, or less in certain circumstances, on the liquidation of our trust account and our warrants will expire worthless.
The grant of registration rights to our initial stockholders and their permitted transferees may make it more difficult to complete our initial business combination, and the future exercise of such rights may adversely affect the market price of our Class A common stock.
Pursuant to an agreement to be entered into concurrently with the issuance and sale of the securities in this offering, our initial stockholders and their permitted transferees can demand that we register the resale of their founder shares after those shares convert to shares of our Class A common stock at the time of our initial business combination. In addition, our initial stockholders and their permitted transferees can demand that we register the resale of the private placement securities and the shares of Class A common stock issuable upon exercise of the private placement warrants, and holders of shares or warrants that may be issued upon conversion of working capital loans may demand that we register the resale of such shares, warrants or the Class A common stock issuable upon exercise of such warrants. The registration and availability of such a significant number of securities for trading in the public market may have an adverse effect on the market price of our Class A common stock. In addition, the existence of the registration rights may make our initial business combination more costly or difficult to complete. This is because the stockholders of the target business may increase the equity stake they seek in the combined entity or ask for more cash consideration to offset the negative impact on the market price of our Class A common stock
that is expected when the common stock owned by our initial stockholders or their permitted transferees, the private placement securities owned by our founders or their permitted transferees or shares or warrants issued in connection with working capital loans are registered for resale.
Because we are neither limited to evaluating target businesses in a particular industry nor have we identified any specific target businesses with which to pursue our initial business combination, you will be unable to ascertain the merits or risks of any particular target business’s operations.
While we may seek to complete a business combination with an operating company in any industry or sector, we intend to focus on businesses in the media, digital media/consumer technology, interactive entertainment and related industries which capitalize on our management team’s and advisors’ expertise. Our amended and restated certificate of incorporation prohibits us from effectuating an initial business combination with another blank check company or similar company with nominal operations. Because we have not yet identified any specific target business with respect to a business combination, there is no basis to evaluate the possible merits or risks of any particular target business’s operations, results of operations, cash flows, liquidity, financial condition or prospects. To the extent we complete our initial business combination, we may be affected by numerous risks inherent in the business operations with which we combine. For example, if we combine with a financially unstable business or an entity lacking an established record of sales or earnings, we may be affected by the risks inherent in the business and operations of a financially unstable or a development stage entity. Although our officers and directors will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all of the significant risk factors or that we will have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business. We also cannot assure you that an investment in our units will ultimately prove to be more favorable to investors than a direct investment, if such opportunity were available, in a business combination target. Accordingly, any stockholders or warrant holders who choose to remain a stockholder or warrant holder following our initial business combination could suffer a reduction in the value of their securities. Such stockholders or warrant holders are unlikely to have a remedy for such reduction in value.
We may seek business combination opportunities in industries or sectors that may be outside of our management’s and advisors’ areas of expertise.
We will consider a business combination outside of our management’s and advisors’ areas of expertise if a business combination candidate is presented to us and we determine that such candidate offers an attractive business combination opportunity for our company. Although our management will endeavor to evaluate the risks inherent in any particular business combination candidate, we cannot assure you that we will adequately ascertain or assess all of the significant risk factors. We also cannot assure you that an investment in our units will not ultimately prove to be less favorable to investors in this offering than a direct investment, if an opportunity were available, in a business combination candidate.
Although we have identified general criteria and guidelines that we believe are important in evaluating prospective target businesses, we may enter into our initial business combination with a target that does not meet such criteria and guidelines, and as a result, the target business with which we enter into our initial business combination may not have attributes entirely consistent with our general criteria and guidelines.
Although we have identified general criteria and guidelines for evaluating prospective target businesses, it is possible that a target business with which we enter into our initial business combination will not have all of these positive attributes. If we complete our initial business combination with a target that does not meet some or all of these criteria and guidelines, such combination may not be as successful as a combination with a business that does meet all of our general criteria and guidelines. In addition, if we announce a prospective business combination with a target that does not meet our general criteria and guidelines, a greater number of stockholders may exercise their redemption rights, which may make it difficult for us to meet any closing condition with a target business that requires us to have a minimum net worth or a certain amount of cash. In addition, if stockholder approval of the transaction is required by applicable law or stock exchange rules, or we decide to obtain stockholder approval for business or other reasons, it may be more difficult for us to attain stockholder approval of our initial business combination if the target business
does not meet our general criteria and guidelines. If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share, or less in certain circumstances, on the liquidation of our trust account and our warrants will expire worthless.
We may seek business combination opportunities with an early stage company, a financially unstable business or an entity lacking an established record of revenue or earnings.
To the extent we complete our initial business combination with an early stage company, a financially unstable business or an entity lacking an established record of sales or earnings, we may be affected by numerous risks inherent in the operations of the business with which we combine. These risks include investing in a business without a proven business model and with limited historical financial data, volatile revenues or earnings, intense competition and difficulties in obtaining and retaining key personnel. Although our officers and directors will endeavor to evaluate the risks inherent in a particular target business, we may not be able to properly ascertain or assess all of the significant risk factors and we may not have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business.
We are not required to obtain an opinion from an independent investment banking firm or from an independent accounting firm, and consequently, you may have no assurance from an independent source that the price we are paying for the business is fair to our company from a financial point of view.
Unless we complete our initial business combination with an affiliated entity or our board cannot independently determine the fair market value of the target business or businesses, we are not required to obtain an opinion from an independent investment banking firm that is a member of FINRA or from an independent accounting firm that the price we are paying is fair to our company from a financial point of view. If no opinion is obtained, our stockholders will be relying on the judgment of our board of directors, who will determine fair market value based on standards generally accepted by the financial community. Such standards used will be disclosed in our tender offer documents or proxy solicitation materials, as applicable, related to our initial business combination.
We may have a limited ability to assess the management of a prospective target business and, as a result, may affect our initial business combination with a target business whose management may not have the skills, qualifications or abilities to manage a public company.
When evaluating the desirability of effecting our initial business combination with a prospective target business, our ability to assess the target business’s management may be limited due to a lack of time, resources or information. Our assessment of the capabilities of the target’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities we suspected. Should the target’s management not possess the skills, qualifications or abilities necessary to manage a public company, the operations and profitability of the post-combination business may be negatively impacted. Accordingly, any stockholders or warrant holders who choose to remain a stockholder or warrant holder following our initial business combination could suffer a reduction in the value of their securities. Such stockholders or warrant holders are unlikely to have a remedy for such reduction in value.
The officers and directors of a business combination candidate may resign upon completion of our initial business combination. The departure of a business combination target’s key personnel could negatively impact the operations and profitability of our post-combination business. The role of a business combination candidate’s key personnel upon the completion of our initial business combination cannot be ascertained at this time. Although we contemplate that certain members of a business combination candidate’s management team will remain associated with the business combination candidate following our initial business combination, it is possible that members of the management of a business combination candidate will not wish to remain in place.
We may issue notes or other debt securities, or otherwise incur substantial debt, to complete a business combination, which may adversely affect our leverage and financial condition and thus negatively impact the value of our stockholders’ investment in us.
Although we have no commitments as of the date of this prospectus to issue any notes or other debt securities, or to otherwise incur outstanding debt following this offering, we may choose to incur substantial
debt to complete our initial business combination. We have agreed that we will not incur any indebtedness unless we have obtained from the lender a waiver of any right, title, interest or claim of any kind in or to the monies held in the trust account. As such, no issuance of debt will affect the per share amount available for redemption from the trust account. Nevertheless, the incurrence of debt could have a variety of negative effects, including:
•
default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations;
•
acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;
•
our immediate payment of all principal and accrued interest, if any, if the debt is payable on demand;
•
our inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing while the debt security is outstanding;
•
our inability to pay dividends on our common stock;
•
using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our common stock if declared, expenses, capital expenditures, business combinations and other general corporate purposes;
•
limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
•
increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and
•
limitations on our ability to borrow additional amounts for expenses, capital expenditures, business combinations, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt.
We may only be able to complete one business combination with the proceeds of this offering and the sale of the private placement securities, which will cause us to be solely dependent on a single business which may have a limited number of products or services. This lack of diversification may negatively impact our operations and profitability.
The net proceeds from this offering and the sale of the private placement securities will provide us with up to $241,250,000 (or $277,437,500 if the underwriters’ over-allotment option is exercised in full) that we may use to complete our initial business combination (after payment of the Marketing Fee of $8,750,000 or up to $10,062,500 if the underwriters’ over-allotment option is exercised in full).
We may effectuate our initial business combination with a single target business or multiple target businesses simultaneously or within a short period of time. However, we may not be able to effectuate our initial business combination with more than one target business because of various factors, including the existence of complex accounting issues and the requirement that we prepare and file pro forma financial statements with the SEC that present operating results and the financial condition of several target businesses as if they had been operated on a combined basis. By completing our initial business combination with only a single entity our lack of diversification may subject us to numerous economic, competitive and regulatory risks. Further, we would not be able to diversify our operations or benefit from the possible spreading of risks or offsetting of losses, unlike other entities which may have the resources to complete several business combinations in different industries or different areas of a single industry. Accordingly, the prospects for our success may be:
•
solely dependent upon the performance of a single business, property or asset; or
•
dependent upon the development or market acceptance of a single or limited number of products, processes or services.
This lack of diversification may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a substantial adverse impact upon the particular industry in which we may operate subsequent to our initial business combination.
We may attempt to simultaneously complete business combinations with multiple prospective targets, which may hinder our ability to complete our initial business combination and give rise to increased costs and risks that could negatively impact our operations and profitability.
If we determine to simultaneously conduct initial business combinations with several businesses that are owned by different sellers, we will need for each of such sellers to agree that our initial business combination with its business is contingent on the simultaneous closings of the other business combinations, which may make it more difficult for us, and delay our ability, to complete our initial business combination. With multiple business combinations, we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations and services or products of the companies with which we conducted an initial business combination in a single operating business. If we are unable to adequately address these risks, it could negatively impact our profitability and results of operations.
We may attempt to complete our initial business combination with a private company about which little information is available, which may result in a business combination with a company that is not as profitable as we suspected, if at all.
In pursuing our business combination strategy, we may seek to effectuate our initial business combination with a privately held company. Very little public information generally exists about private companies, and we could be required to make our decision on whether to pursue a potential initial business combination on the basis of limited information, which may result in a business combination with a company that is not as profitable as we suspected, if at all.
We do not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to complete our initial business combination with which a substantial majority of our stockholders do not agree.
Our amended and restated certificate of incorporation will not provide a specified maximum redemption threshold, except that in no event will we redeem our public shares in an amount that would cause our net tangible assets, after payment of the Marketing Fee, to be less than $5,000,001 (such that we do not then become subject to the SEC’s “penny stock” rules), or any greater net tangible asset or cash requirement that may be contained in the agreement relating to our initial business combination. As a result, we may be able to complete our initial business combination even though a substantial majority of our public stockholders do not agree with the transaction and have redeemed their shares or, if we seek stockholder approval of our initial business combination and do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, have entered into privately negotiated agreements to sell their shares to our founders, officers, directors or any of their affiliates. In the event the aggregate cash consideration we would be required to pay for all shares of common stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of cash available to us, we will not complete the business combination or redeem any shares, all shares of common stock submitted for redemption will be returned to the holders thereof, and we instead may search for an alternate business combination.
In order to effectuate an initial business combination, blank check companies have, in the recent past, amended various provisions of their charters and modified governing instruments, including their warrant agreements. We cannot assure you that we will not seek to amend our amended and restated certificate of incorporation or governing instruments in a manner that will make it easier for us to complete our initial business combination that some of our stockholders may not support.
In order to effectuate an initial business combination, blank check companies have, in the recent past, amended various provisions of their charters and modified governing instruments, including their warrant
agreements. For example, blank check companies have amended the definition of business combination, increased redemption thresholds extended the time to consummate an initial business combination and, with respect to their warrants, amended their warrant agreements to require the warrants to be exchanged for cash and/or other securities. We cannot assure you that we will not seek to amend our charter or governing instruments or extend the time to consummate an initial business combination in order to effectuate our initial business combination.
Certain provisions of our amended and restated certificate of incorporation that relate to our pre-business combination activity (and corresponding provisions of the agreement governing the release of funds from our trust account) may be amended with the approval of holders of 65% of our common stock, which is a lower amendment threshold than that of some other blank check companies. It may be easier for us, therefore, to amend our amended and restated certificate of incorporation to facilitate the completion of an initial business combination that some of our stockholders may not support.
Some other blank check companies have a provision in their charter which prohibits the amendment of certain of its provisions, including those which relate to a company’s pre-business combination activity, without approval by holders of a certain percentage of the company’s stockholders. In those companies, amendment of these provisions typically requires approval by holders holding between 90% and 100% of the company’s public shares. Our amended and restated certificate of incorporation will provide that any of its provisions related to pre-business combination activity (including the requirement to deposit proceeds of this offering and the private placement securities into the trust account and not release such amounts except in specified circumstances) may be amended if approved by holders of at least 65% of our common stock who attend and vote in a stockholder meeting, and corresponding provisions of the trust agreement governing the release of funds from our trust account may be amended if approved by holders of 65% of our common stock. In all other instances, our amended and restated certificate of incorporation will provide that it may be amended by holders of a majority of our common stock, subject to applicable provisions of the DGCL or applicable stock exchange rules. Our initial stockholders, who will beneficially own 20% of our common stock upon the closing of this offering (assuming they do not purchase any units in this offering and excluding any private placement securities which may be owned by or deemed to be beneficially owned by our initial stockholders or any securities issued upon conversion of working capital loans), may participate in any vote to amend our amended and restated certificate of incorporation and/or trust agreement and will have the discretion to vote in any manner they choose. As a result, we may be able to amend the provisions of our amended and restated certificate of incorporation which will govern our pre-business combination behavior more easily than some other blank check companies, and this may increase our ability to complete our initial business combination with which you do not agree. Our stockholders may pursue remedies against us for any breach of our amended and restated certificate of incorporation.
Our initial stockholders have agreed, pursuant to a written agreement, that they will not propose any amendment to our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering, unless we provide our public stockholders with the opportunity to redeem their shares of Class A common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, divided by the number of then outstanding public shares. These agreements are contained in a letter agreement that we have entered into with our initial stockholders. Our stockholders are not parties to, or third-party beneficiaries of, these agreements and, as a result, will not have the ability to pursue remedies against our initial stockholders for any breach of these agreements. As a result, in the event of a breach, our stockholders would need to pursue a stockholder derivative action, subject to applicable law.
We may be unable to obtain additional financing to complete our initial business combination or to fund the operations and growth of a target business, which could compel us to restructure or abandon a particular business combination.
Although we believe that the net proceeds of this offering and the sale of the private placement securities will represent sufficient equity capital to allow us to complete our initial business combination, because we have not yet identified any specific prospective target business we cannot ascertain the capital requirements for any particular transaction. If the net proceeds of this offering and the sale of the private
placement securities prove to be insufficient, either because of the size of our initial business combination, the depletion of the available net proceeds in search of a target business, the obligation to redeem for cash a significant number of shares from stockholders who elect redemption in connection with our initial business combination or the terms of negotiated transactions to purchase shares in connection with our initial business combination, we may be required to seek additional financing or to abandon the proposed business combination. We cannot assure you that such financing will be available on acceptable terms, if at all. To the extent that additional financing proves to be unavailable when needed to complete our initial business combination, we would be compelled to either restructure the transaction or abandon that particular business combination and seek an alternative target business combination candidate. In addition, even if we do not need additional financing to complete our initial business combination, we may require such financing to fund the operations or growth of the target business. The failure to secure additional financing could have a material adverse effect on the continued development or growth of the target business. None of our officers, directors or stockholders is required to provide any financing to us in connection with or after our initial business combination. If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share, or less in certain circumstances, on the liquidation of our trust account, and our warrants will expire worthless.
A provision of our warrant agreement may make it more difficult for us to consummate an initial business combination.
If (x) we issue additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of our initial business combination at an issue price or effective issue price of less than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by our board of directors and, in the case of any such issuance to our initial stockholders or their affiliates, without taking into account any founder shares or private placement shares held by our initial stockholders or such affiliates, as applicable, prior to such issuance), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of our initial business combination, and (z) the volume weighted average trading price of our Class A common stock during the 10 trading day period starting on the trading day after the day on which we consummate our initial business combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the Market Value, and the $18.00 per share redemption trigger price described above will be adjusted (to the nearest cent) to be equal to 180% of the Market Value. This may make it more difficult for us to consummate an initial business combination with a target business.
Because we must furnish our stockholders with target business financial statements, we may lose the ability to complete an otherwise advantageous initial business combination with some prospective target businesses.
The federal proxy rules require that a proxy statement with respect to a vote on a business combination meeting certain financial significance tests include historical and/or pro forma financial statement disclosure in periodic reports. We will include the same financial statement disclosure in connection with our tender offer documents, whether or not they are required under the tender offer rules. These financial statements may be required to be prepared in accordance with, or be reconciled to, accounting principles generally accepted in the United States of America, or GAAP, or international financial reporting standards as issued by the International Accounting Standards Board, or IFRS, depending on the circumstances and the historical financial statements may be required to be audited in accordance with the standards of the Public Company Accounting Oversight Board (United States), or PCAOB. These financial statement requirements may limit the pool of potential target businesses with which we may conduct an initial busines combination because some targets may be unable to provide such financial statements in time for us to disclose such financial statements in accordance with federal proxy rules and complete our initial business combination within the prescribed time frame.
Compliance obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate our initial business combination, require substantial financial and management resources, and increase the time and costs of completing an initial business combination.
Section 404 of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with our Annual Report on Form 10-K for the year ending December 31, 2021. Only in
the event we are deemed to be a large accelerated filer or an accelerated filer, and no longer qualify as an emerging growth company, will we be required to comply with the independent registered public accounting firm attestation requirement on our internal control over financial reporting. Further, for as long as we remain an emerging growth company, we will not be required to comply with the independent registered public accounting firm attestation requirement on our internal control over financial reporting. The fact that we are a blank check company makes compliance with the requirements of the Sarbanes-Oxley Act particularly burdensome on us as compared to other public companies because a target business with which we seek to complete our initial business combination may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of its internal controls. The development of the internal control of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such initial business combination.
If we pursue a company with operations or opportunities outside of the United States for our initial business combination, we may face additional burdens in connection with investigating, agreeing to and completing such combination, and if we effect such initial business combination, we would be subject to a variety of additional risks that may negatively impact our operations.
If we pursue a company with operations or opportunities outside of the United States for our initial business combination, we would be subject to risks associated with cross-border business combinations, including in connection with investigating, agreeing to and completing our initial business combination, conducting due diligence in a foreign market, having such transaction approved by any local governments, regulators or agencies and changes in the purchase price based on fluctuations in foreign exchange rates.
If we effect our initial business combination with such a company, we would be subject to any special considerations or risks associated with companies operating in an international setting, including any of the following:
•
costs and difficulties inherent in managing cross-border business operations and complying with commercial and legal requirements of overseas markets;
•
rules and regulations regarding currency redemption;
•
complex corporate withholding taxes on individuals;
•
laws governing the manner in which future business combinations may be effected;
•
exchange listing and/or delisting requirements;
•
tariffs and trade barriers;
•
regulations related to customs and import/export matters;
•
local or regional economic policies and market conditions;
•
unexpected changes in regulatory requirements;
•
challenges in managing and staffing international operations;
•
longer payment cycles;
•
tax consequences, such as tax law changes, including termination or reduction of tax and other incentives that the applicable government provides to domestic companies, and variations in tax laws as compared to the United States;
•
currency fluctuations and exchange controls;
•
rates of inflation;
•
challenges in collecting accounts receivable;
•
cultural and language differences;
•
employment regulations;
•
underdeveloped or unpredictable legal or regulatory systems;
•
corruption;
•
protection of intellectual property;
•
social unrest, crime, strikes, riots, civil disturbances, regime changes, political upheaval, terrorist attacks, natural disasters and wars;
•
deterioration of political relations with the United States;
•
obligatory military service by personnel; and
•
government appropriation of assets.
We may not be able to adequately address these additional risks. If we were unable to do so, we may be unable to complete such combination or, if we complete such combination, our operations might suffer, either of which may adversely impact our results of operations and financial condition.
If our management following our initial business combination is unfamiliar with U.S. securities laws, they may have to expend time and resources becoming familiar with such laws, which could lead to various regulatory issues.
Following our initial business combination, any or all of our management could resign from their positions as officers of the Company, and the management of the target business at the time of the business combination could remain in place. Management of the target business may not be familiar with U.S. securities laws. If new management is unfamiliar with U.S. securities laws, they may have to expend time and resources becoming familiar with such laws. This could be expensive and time-consuming and could lead to various regulatory issues which may adversely affect our operations.
Risks Related to an Investment in our Securities
You will not have any rights or interests in funds from the trust account, except under certain limited circumstances. To liquidate your investment, therefore, you may be forced to sell your public shares or warrants, potentially at a loss.
Our public stockholders will be entitled to receive funds from the trust account only upon the earlier to occur of: (1) the completion of our initial business combination, and then only in connection with those shares of Class A common stock that such stockholder properly elected to redeem, subject to the limitations described herein; (2) the redemption of any public shares properly tendered in connection with a stockholder vote to amend our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering; and (3) the redemption of all of our public shares if we are unable to complete our initial business combination within 24 months from the closing of this offering, subject to applicable law and as further described herein. In addition, if our plan to redeem our public shares if we are unable to complete an initial business combination within 24 months from the closing of this offering is not completed for any reason, compliance with Delaware law may require that we submit a plan of dissolution to our then-existing stockholders for approval prior to the distribution of the proceeds held in our trust account. In that case, public stockholders may be forced to wait beyond 24 months from the closing of this offering before they receive funds from our trust account. In no other circumstances will a public stockholder have any right or interest of any kind in the trust account. Holders of warrants will not have any right to the proceeds held in the trust account with respect to the warrants. Accordingly, to liquidate your investment, you may be forced to sell your public shares or warrants, potentially at a loss.
Nasdaq may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.
Our units have been approved for listing on Nasdaq on or promptly after the date of this prospectus and our Class A common stock and warrants listed on or promptly after their date of separation. Although after giving effect to this offering we expect to meet the minimum initial listing standards set forth in the Nasdaq listing standards, we cannot assure you that our securities will be, or will continue to be, listed on Nasdaq in the future or prior to our initial business combination. In order to continue listing our securities on Nasdaq prior to our initial business combination, we must maintain certain financial, distribution and stock price levels. In general, we must maintain a minimum amount in stockholders’ equity (generally $2,500,000) and a minimum number of holders of our securities (generally 300 round-lot holders).
Additionally, in connection with our initial business combination, we will be required to demonstrate compliance with Nasdaq’s initial listing requirements, which are more rigorous than Nasdaq’s continued listing requirements, in order to continue to maintain the listing of our securities on Nasdaq. For instance, our stock price would generally be required to be at least $4 per share and our stockholders’ equity would generally be required to be at least $5,000,000 and we would be required to have a minimum of 300 round-lot holders (with at least 50% of such round lot holders holding securities with a market value of at least $2,500). We cannot assure you that we will be able to meet those initial listing requirements at that time.
If Nasdaq delists any of our securities from trading on its exchange and we are not able to list such securities on another national securities exchange, we expect such securities could be quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences, including:
•
a limited availability of market quotations for our securities;
•
reduced liquidity for our securities;
•
a determination that our Class A common stock is a “penny stock” which will require brokers trading in our Class A common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;
•
a limited amount of news and analyst coverage; and
•
a decreased ability to issue additional securities or obtain additional financing in the future.
The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.” Because we expect that our units and eventually our Class A common stock and warrants will be listed on Nasdaq, our units, Class A common stock and warrants will qualify as covered securities under such statute. Although the states are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. While we are not aware of a state having used these powers to prohibit or restrict the sale of securities issued by blank check companies, other than the State of Idaho, certain state securities regulators view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states. Further, if we were no longer listed on Nasdaq, our securities would not qualify as covered securities under such statute and we would be subject to regulation in each state in which we offer our securities.
You will not be entitled to protections normally afforded to investors of many other blank check companies.
Since the net proceeds of this offering and the sale of the private placement securities are intended to be used to complete an initial business combination with a target business that has not been identified, we may be deemed to be a “blank check” company under the U.S. securities laws. However, because we will have net tangible assets in excess of $5,000,000 upon the successful completion of this offering and the sale of the private placement securities and will file a Current Report on Form 8-K, including an audited balance sheet demonstrating this fact, we are exempt from rules promulgated by the SEC to protect investors in blank check companies, such as Rule 419. Accordingly, investors will not be afforded the benefits or protections of those rules. Among other things, this means our units will be immediately tradable and we will have a longer period of time to complete our initial business combination than do companies subject to Rule 419. Moreover, if this offering were subject to Rule 419, that rule would prohibit the release of any interest earned on funds held in the trust account to us unless and until the funds in the trust account were released to us in connection with our completion of our initial business combination. For a more detailed comparison of our offering to offerings that comply with Rule 419, please see “Proposed Business — Comparison of This Offering to Those of Blank Check Companies Subject to Rule 419.”
If we seek stockholder approval of our initial business combination and we do not conduct redemptions pursuant to the tender offer rules, and if you or a “group” of stockholders are deemed to hold in excess of 15% of our Class A common stock, you will lose the ability to redeem all such shares in excess of 15% of our Class A common stock.
If we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our amended and
restated certificate of incorporation will provide that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than an aggregate of 15% of the shares sold in this offering, without our prior consent, which we refer to as the “Excess Shares.” However, we would not be restricting our stockholders’ ability to vote all of their shares (including Excess Shares) for or against our initial business combination. Your inability to redeem the Excess Shares will reduce your influence over our ability to complete our initial business combination and you could suffer a material loss on your investment in us if you sell Excess Shares in open market transactions. Additionally, you will not receive redemption distributions with respect to the Excess Shares if we complete our initial business combination. And as a result, you will continue to hold that number of shares exceeding 15% and, in order to dispose of such shares, would be required to sell your stock in open market transactions, potentially at a loss.
Subsequent to our completion of our initial business combination, we may be required to subsequently 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 the price of our securities, which could cause you to lose some or all of your investment.
Even if we conduct extensive due diligence on a target business with which we combine, we cannot assure you that this diligence will identify all material issues that may be present with a particular target business, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of the target business and outside of our control will not later arise. As a result of these factors, we may be forced to later write-down or write-off assets, restructure our operations, or incur impairment or other charges that could result in our reporting losses. Even if our 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 we report charges of this nature could contribute to negative market perceptions about us or our securities. In addition, charges of this nature may cause us to violate net worth or other covenants to which we may be subject as a result of assuming pre-existing debt held by a target business or by virtue of our obtaining post-combination debt financing. Accordingly, any stockholders or warrant holders who choose to remain a stockholder or warrant holder following our initial business combination could suffer a reduction in the value of their securities. Such stockholders or warrant holders are unlikely to have a remedy for such reduction in value.
If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per share redemption amount received by stockholders may be less than $10.00 per share.
Our placing of funds in the trust account may not protect those funds from third-party claims against us. Although we will seek to have all vendors, service providers, prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders, such parties may not execute such agreements, or even if they execute such agreements they may not be prevented from bringing claims against the trust account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against our assets, including the funds held in the trust account. If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account, our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such third party’s engagement would be significantly more beneficial to us than any alternative. The underwriters of this offering will not execute agreements with us waiving such claims to the monies held in the trust account.
Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where we are unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust
account for any reason. Upon redemption of our public shares, if we are unable to complete our initial business combination within the prescribed timeframe, or upon the exercise of a redemption right in connection with our initial business combination, we will be required to provide for payment of claims of creditors that were not waived that may be brought against us within the 10 years following redemption. Accordingly, the per share redemption amount received by public stockholders could be less than the $10.00 per share initially held in the trust account, due to claims of such creditors.
Our sponsor has agreed that it will be liable to us if and to the extent any claims by a third party for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amount of funds in the trust account to below (1) $10.00 per public share or (2) such lesser amount per public share held in the trust account as of the date of the liquidation of the trust account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay our franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses), except as to any claims by a third party who executed a waiver of any and all rights to seek access to the trust account and except as to any claims under our indemnity of the underwriters of this offering against certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, our sponsor will not be responsible to the extent of any liability for such third party claims. We have not independently verified whether our sponsor has sufficient funds to satisfy its indemnity obligations and believe that our sponsor’s only assets are securities of our company and, therefore, our sponsor may not be able to satisfy those obligations. We have not asked our sponsor to reserve for such 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.
Our directors may decide not to enforce the indemnification obligations of our 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; or (2) such lesser amount per share held in the trust account as of the date of the liquidation of the trust account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay our franchise and income taxes, and our sponsor asserts that it is unable to satisfy its obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action against our sponsor to enforce its indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf against our sponsor to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment and subject to their fiduciary duties may choose not to do so in certain instances. If our independent directors choose not to enforce these indemnification obligations, the amount of funds in the trust account available for distribution to our public stockholders may be reduced below $10.00 per share.
If, after we distribute 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, a bankruptcy court may seek to recover such proceeds, and the members of our board of directors may be viewed as having breached their fiduciary duties to our creditors, thereby exposing the members of our board of directors and us to claims of punitive damages.
If, after we distribute 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, 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 some or all amounts received by our stockholders. In addition, our board of directors may be viewed as having breached its fiduciary duty to our creditors and/or having acted in bad faith by paying public stockholders from the trust account prior to addressing the claims of creditors, thereby exposing itself and us to claims of punitive damages.
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 public stockholders in connection with our liquidation would be reduced.
Our stockholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption of their shares.
Under the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete our initial business combination within 24 months from the closing of this offering may be considered a liquidating distribution under Delaware law. If a corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution. However, it is our intention to redeem our public shares as soon as reasonably possible following the 24th month from the closing of this offering in the event we do not complete our initial business combination and, therefore, we do not intend to comply with those procedures.
Because we do not intend to comply with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within the 10 years following our dissolution. However, because we are a blank check company, rather than an operating company, and our operations will be limited to searching for prospective target businesses with which we may conduct an initial business combination, the only likely claims to arise would be from our vendors (such as lawyers, investment bankers, consultants, etc.) or prospective target businesses. If our plan of distribution complies with Section 281(b) of the DGCL, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would likely be barred after the third anniversary of the dissolution. We cannot assure you that we will properly assess all claims that may be potentially brought against us. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend beyond the third anniversary of such date. Furthermore, if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete our initial business combination within 24 months from the closing of this offering is not considered a liquidating distribution under Delaware law and such redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidating distribution.
We may not hold an annual meeting of stockholders until after the consummation of our initial business combination and you will not be entitled to any of the corporate protections provided by such a meeting.
We may not hold an annual meeting of stockholders until after we consummate our initial business combination (unless required by Nasdaq) and thus may not be in compliance with Section 211(b) of the DGCL, which requires an annual meeting of stockholders be held for the purposes of electing directors in accordance with a company’s bylaws unless such election is made by written consent in lieu of such a meeting.
Therefore, if our stockholders want us to hold an annual meeting prior to our consummation of our initial business combination, they may attempt to force us to hold one by submitting an application to the Delaware Court of Chancery in accordance with Section 211(c) of the DGCL.
We are not registering the shares of Class A common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time, and such registration may not be in place when an investor desires to exercise warrants, thus precluding such investor from being able to exercise its warrants except on a “cashless basis” and potentially causing such warrants to expire worthless.
We are not registering the shares of Class A common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time. However, under the terms of the warrant agreement, we have agreed, as soon as practicable, but in no event later than 15 business days after the closing of our initial business combination, to use our best efforts to file a registration statement under the Securities Act covering the issuance of such shares and maintain a current prospectus relating to the Class A common stock issuable upon exercise of the warrants, until the expiration of the warrants in accordance with the provisions of the warrant agreement. We cannot assure you that we will be able to do so if, for example, any facts or events arise which represent a fundamental change in the information set forth in the registration statement or prospectus, the financial statements contained or incorporated by reference therein are not current, complete or correct or the SEC issues a stop order. If the shares issuable upon exercise of the warrants are not registered under the Securities Act, we will be required to permit holders to exercise their warrants on a cashless basis in which case, the number of Class A common stock that you will receive upon cashless exercise will be based on a formula subject to a maximum amount of shares equal to 0.361 shares of Class A common stock per warrant (subject to adjustment). However, no warrant will be exercisable for cash or on a cashless basis, and we will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder or an exemption from registration is available. Notwithstanding the above, if our Class A common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, we may, at our option, require holders of public warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event we so elect, we will not be required to file or maintain in effect a registration statement, but we will use our best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. In no event will we be required to net cash settle any warrant, or issue securities or other compensation in exchange for the warrants in the event that we are unable to register or qualify the shares underlying the warrants under applicable state securities laws and no exemption is available. If the issuance of the shares upon exercise of the warrants is not so registered or qualified or exempt from registration or qualification, the holder of such warrant shall not be entitled to exercise such warrant and such warrant may have no value and expire worthless. In such event, holders who acquired their warrants as part of a purchase of units will have paid the full unit purchase price solely for the shares of Class A common stock included in the units. 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 shares of Class A common stock for sale under all applicable state securities laws.
We may issue additional shares of Class A common stock or preferred stock to complete our initial business combination or under an employee incentive plan after completion of our initial business combination. We may also issue shares of Class A common stock upon the conversion of the Class F common stock at a ratio greater than one-to-one at the time of our initial business combination as a result of the anti-dilution provisions described herein. Any such issuances would dilute the interest of our stockholders and likely present other risks.
Our amended and restated certificate of incorporation will authorize the issuance of up to 500,000,000 shares of Class A common stock, par value $0.0001 per share, and 25,000,000 shares of Class F common stock, par value $0.0001 per share, and 5,000,000 shares of undesignated preferred stock, par value $0.0001 per share. Immediately after this offering, there will be 465,730,000 and 18,750,000 (assuming in each case, that the underwriters have not exercised their over-allotment option) authorized but unissued shares of Class A and Class F common stock available, respectively, for issuance, which amount takes into account shares reserved for issuance upon exercise of outstanding warrants. Shares of Class F common stock are
automatically convertible into shares of our Class A common stock at the time of our initial business combination, initially at a one-for-one ratio but subject to adjustment as set forth herein.
We may issue a substantial number of additional shares of Class A common stock and may issue shares of preferred stock, in order to complete our initial business combination or under an employee incentive plan after completion of our initial business combination. We may also issue shares of Class A common stock to redeem the warrants as described in “Description of Securities — Warrants — Public Stockholders’ Warrants — Redemption of warrants when the price per share of Class A common stock equals or exceeds $10.00” or upon conversion of the Class F common stock at a ratio greater than one-to-one at the time of our initial business combination as a result of the anti-dilution provisions described herein. However, our amended and restated certificate of incorporation will provide, among other things, that prior to our initial business combination, we may not issue additional shares of capital stock that would entitle the holders thereof to (1) receive funds from the trust account or (2) vote on any initial business combination. The issuance of additional shares of common or preferred stock:
•
may significantly dilute the equity interest of investors in this offering;
•
may subordinate the rights of holders of common stock if preferred stock is issued with rights senior to those afforded our common stock;
•
could cause a change in control if a substantial number of common stock is issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; and
•
may adversely affect prevailing market prices for our units, common stock and/or warrants.
Resources could be wasted in researching business combinations that are not completed, which could materially adversely affect subsequent attempts to locate and acquire or merge with another business. If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share, or less than such amount in certain circumstances, on the liquidation of our trust account and our warrants will expire worthless.
We anticipate that the investigation of each specific target business and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments will require substantial management time and attention and substantial costs for accountants, attorneys and others. If we decide not to complete a specific initial business combination, the costs incurred up to that point for the proposed transaction likely would not be recoverable. Furthermore, if we reach an agreement relating to a specific target business, we may fail to complete our initial business combination for any number of reasons including those beyond our control. Any such event will result in a loss to us of the related costs incurred which could materially adversely affect subsequent attempts to locate and acquire or merge with another business. If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share, or less in certain circumstances, on the liquidation of our trust account and our warrants will expire worthless.
Our founders paid an aggregate of $25,000, or approximately $0.003 per founder share, and, accordingly, you will experience immediate and substantial dilution from the purchase of our Class A common stock.
The difference between the public offering price per share (allocating all of the unit purchase price to the common stock and none to the warrant included in the unit) and the pro forma net tangible book value per share of our Class A common stock after this offering constitutes the dilution to you and the other investors in this offering. Our initial stockholders acquired the founder shares at a nominal price, significantly contributing to this dilution. Upon the closing of this offering, and assuming no value is ascribed to the warrants included in the units, you and the other public stockholders will incur an immediate and substantial dilution of approximately 93.2% (or $9.32 per share, assuming no exercise of the underwriters’ over-allotment option), the difference between the pro forma net tangible book value per share of $0.68 and the initial offering price of $10.00 per unit. This dilution would increase to the extent that the anti-dilution provisions of the Class F common stock result in the issuance of shares of Class A common stock on a greater than one-to-one basis upon conversion of the Class F common stock at the time of our initial business combination and would become exacerbated to the extent that public stockholders seek redemptions from
the trust. In addition, because of the anti-dilution protection in the founder shares, any equity or equity-linked securities issued in connection with our initial business combination would be disproportionately dilutive to our Class A common stock.
We may amend the terms of the warrants in a manner that may be adverse to holders of public warrants with the approval by the holders of at least 65% of the then outstanding public warrants. As a result, the exercise price of your warrants could be increased, the warrants could be converted into cash or stock, the exercise period could be shortened and the number of shares of our Class A common stock purchasable upon exercise of a warrant could be decreased, all without your approval.
Our warrants will be issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but requires the approval by the holders of at least 65% of the then outstanding public warrants to make any change that adversely affects the interests of the registered holders of public warrants. Accordingly, we may amend the terms of the public warrants in a manner adverse to a holder if holders of at least 65% of the then outstanding public warrants approve of such amendment. Although our ability to amend the terms of the public warrants with the consent of at least 65% of the then outstanding public warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the warrants, convert the warrants into cash or stock, shorten the exercise period or decrease the number of shares of our common stock purchasable upon exercise of a warrant.
We may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
We have the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the last reported sales price of our Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like and for certain issuances of Class A common stock and equity-linked securities as described above) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to the date we send the notice of redemption to the warrant holders. 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 you to: (1) exercise your warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so (2) sell your warrants at the then-current market price when you might otherwise wish to hold your warrants; or (3) 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 your warrants.
In addition, we have the ability to redeem outstanding public warrants commencing ninety days after they become exercisable and prior to their expiration, at a price of $0.10 per warrant if, among other things, the last reported sale price of our Class A common stock equals or exceeds $10.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) on the trading day prior to the date on which we send the notice of redemption to the warrant holders. In such a case, the holders will be able to exercise their warrants for cash or on a cashless basis prior to redemption and receive that number of shares of Class A common stock determined by reference to the table set forth under “Description of Securities — Warrants — Public Stockholders’ Warrants” based on the redemption date and the “fair market value” of our Class A common stock (as defined below) except as otherwise described in “Description of Securities — Warrants — Public Stockholders’ Warrants.” The value received upon exercise of the warrants (1) may be less than the value the holders would have received if they had exercised their warrants at a later time where the underlying share price is higher and (2) may not compensate the holders for the value of the warrants, including because the number of shares received is capped at 0.361 shares of Class A common stock per warrant (subject to adjustment) irrespective of the remaining life of the warrants.
None of the private placement warrants will be redeemable by us so long as they are held by our initial stockholders or their permitted transferees.
Our warrants and founder shares may have an adverse effect on the market price of our Class A common stock and make it more difficult to effectuate our initial business combination.
We will be issuing warrants to purchase 8,333,333 shares of our Class A common stock (or up to 9,583,333 shares of our Class A common stock if the underwriters’ over-allotment option is exercised in full), at a price of $11.50 per whole share, as part of the units offered by this prospectus and, simultaneously with the closing of this offering, we will be issuing in a private placement an aggregate of 702,500 (or 777,500 if the underwriters’ over-allotment option is exercised in full) private placement units, for $10.00 per private placement unit, or an aggregate amount of $7,025,000 (or $7,775,000 if the underwriters’ over-allotment option is exercised in full), consisting of one private placement share of Class A common stock and one-third of one private placement warrant exercisable to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment as provided herein. Our initial stockholders currently hold 7,187,500 founder shares (up to 937,500 of which are subject to forfeiture by our founders depending on the extent to which the underwriters’ over-allotment option is exercised). The founder shares are convertible into shares of Class A common stock on a one-for-one basis, subject to adjustment as set forth herein. In addition, if our sponsor, management team or their affiliates make any working capital loans, up to $1,500,000 of such loans may be converted at the time of the business combination and at the option of the lender at a price of $10.00 per unit into units consisting of one share of Class A common stock and one-third of one warrant to purchase one share of Class A common stock at a price of $11.50 per share. Such units would be identical to the private placement units. PA 2 Co-Investment and Craig-Hallum, and their respective affiliates, will not provide any such working capital loans or receive any such units into which such loans are convertible. To the extent that we issue shares of Class A common stock to effectuate a business transaction, the potential for the issuance of a substantial number of additional shares of Class A common stock upon exercise of these warrants or conversion rights could make us a less attractive business combination vehicle to a target business. Any such issuance will increase the number of outstanding shares of our Class A common stock and reduce the value of the Class A common stock issued to complete the business transaction. Therefore, our warrants and founder shares may make it more difficult to effectuate a business combination or increase the cost of acquiring the target business.
The private placement warrants are identical to the warrants sold as part of the units in this offering except that, so long as they are held by our initial stockholders or their permitted transferees: (1) they will not be redeemable by us; (2) they (including the Class A common stock issuable upon exercise of these warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold by our initial stockholders until 30 days after the completion of our initial business combination; (3) they may be exercised by the holders on a cashless basis; and (4) they (including the shares of common stock issuable upon exercise of these warrants) are entitled to registration rights.
Because each unit contains one-third of one warrant and only a whole warrant may be exercised, the units may be worth less than units of other blank check companies.
Each unit contains one-third of one warrant. Pursuant to the warrant agreement, no fractional warrants will be issued upon separation of the units, and only whole warrants will trade. This is different from other offerings similar to ours whose units include one share of Class A common stock and one warrant to purchase one-third of one whole share. We have established the components of the units in this way in order to reduce the dilutive effect of the warrants upon completion of a business combination since the warrants will be exercisable in the aggregate for one-third of the number of shares compared to units that each contain a warrant to purchase one whole share, thus making us, we believe, a more attractive business combination partner for target businesses. Nevertheless, this unit structure may cause our units to be worth less than if they included a warrant to purchase one whole share.
There is currently no market for our securities and a market for our securities may not develop, which would adversely affect the liquidity and price of our securities.
There is currently no market for our securities. Stockholders therefore have no access to information about prior market history on which to base their investment decision. Following this offering, the price of our securities may vary significantly due to one or more potential business combinations and general market
or economic conditions. Furthermore, an active trading market for our securities may never develop or, if developed, it may not be sustained. You may be unable to sell your securities unless a market can be established and sustained.
Provisions in our amended and restated certificate of incorporation and Delaware law may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for our Class A common stock and could entrench management.
Our amended and restated certificate of incorporation will contain provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests. These provisions include a staggered board of directors and the ability of the board of directors to designate the terms of and issue new series of preferred shares, which may make more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
We are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together these provisions may make more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
Risks Related to our Leadership Team and Their Influence
Past performance by our management team and advisors may not be indicative of future performance of an investment in us.
Information regarding performance by, or businesses associated with, our management team and advisors is presented for informational purposes only. Any past experience and performance of our management team and advisors is not a guarantee either: (1) that we will be able to successfully identify a suitable candidate for our initial business combination; or (2) of any results with respect to any initial business combination we may consummate. You should not rely on the historical record of our management team’s or advisors’ performance as indicative of the future performance of an investment in us or the returns we will, or are likely to, generate going forward. Our sponsor has not had experience with a blank check company or special purpose acquisition company in the past, and not all members of our management team and advisors have had experience with a blank check company or special purpose acquisition company in the past.
We may not have sufficient funds to satisfy indemnification claims of our directors and executive officers.
We have agreed to indemnify our officers and directors to the fullest extent permitted by law. However, our officers and directors have agreed to waive any right, title, interest or claim of any kind in or to any monies in the trust account and to not seek recourse against the trust account for any reason whatsoever. Accordingly, any indemnification provided will be able to be satisfied by us only if (i) we have sufficient funds outside of the trust account or (ii) we consummate an initial business combination. Our obligation to indemnify our officers and directors may discourage stockholders from bringing a lawsuit against our officers or directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against our officers and directors, even though such an action, if successful, might otherwise benefit us and our stockholders. Furthermore, a stockholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage awards against our officers and directors pursuant to these indemnification provisions.
Our officers and directors will allocate their time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our affairs. This conflict of interest could have a negative impact on our ability to complete our initial business combination.
Our officers and directors are not required to, and will not, commit their full time to our affairs, which may result in a conflict of interest in allocating their time between our operations and our search for a business combination and their other businesses. We do not intend to have any full-time employees prior to the completion of our initial business combination. Each of our officers is engaged in several other business endeavors for which he may be entitled to substantial compensation and our officers are not obligated to
contribute any specific number of hours per week to our affairs. Our independent directors may also serve as officers or board members for other entities. If our officers’ and directors’ other business affairs require them to devote substantial amounts of time to such affairs in excess of their current commitment levels, it could limit their ability to devote time to our affairs which may have a negative impact on our ability to complete our initial business combination. For a complete discussion of our officers’ and directors’ other business affairs, please see the section of this prospectus entitled “Management — Directors and Officers.”
We are dependent upon our executive officers and directors and their loss could adversely affect our ability to operate.
Our operations are dependent upon a relatively small group of individuals and, in particular, our executive officers and directors. We believe that our success depends on the continued service of our officers and directors, at least until we have completed our initial business combination. In addition, our executive officers and directors are not required to commit any specified amount of time to our affairs and, accordingly, will have conflicts of interest in allocating their time among various business activities, including identifying potential business combinations and monitoring the related due diligence. We do not have an employment agreement with, or key-man insurance on the life of, any of our directors or executive officers. The unexpected loss of the services of one or more of our directors or executive officers could have a detrimental effect on us.
Our ability to successfully effect our initial business combination and to be successful thereafter will be dependent upon the efforts of our key personnel, some of whom may join us following our initial business combination. The loss of key personnel could negatively impact the operations and profitability of our post-combination business.
Our ability to successfully effect our initial business combination is dependent upon the efforts of our key personnel. The role of our key personnel in the target business, however, cannot presently be ascertained. Although some of our key personnel may remain with the target business in senior management or advisory positions following our initial business combination, it is likely that some or all of the management of the target business will remain in place. While we intend to closely scrutinize any individuals we engage after our initial business combination, we cannot assure you that our assessment of these individuals will prove to be correct. These individuals may be unfamiliar with the requirements of operating a company regulated by the SEC, which could cause us to have to expend time and resources helping them become familiar with such requirements.
Our key personnel may negotiate employment or consulting agreements with a target business in connection with a particular business combination. These agreements may provide for them to receive compensation following our initial business combination and as a result, may cause them to have conflicts of interest in determining whether a particular business combination is the most advantageous.
Our key personnel may be able to remain with the company after the completion of our initial business combination only if they are able to negotiate employment or consulting agreements in connection with the business combination. Such negotiations would take place simultaneously with the negotiation of the business combination and could provide for such individuals to receive compensation in the form of cash payments and/or our securities for services they would render to us after the completion of the business combination. The personal and financial interests of such individuals may influence their motivation in identifying and selecting a target business subject to their fiduciary duties under Delaware law.
Certain of our officers and directors are now, and all of them may in the future become, affiliated with entities engaged in business activities similar to those intended to be conducted by us and, accordingly, may have conflicts of interest in determining to which entity a particular business opportunity should be presented.
Following the completion of this offering and until we consummate our initial business combination, we intend to engage in the business of identifying and combining with one or more businesses. Our sponsor and officers and directors are, or may in the future become, affiliated with entities that are engaged in a similar business.
As more fully discussed in “Management — Conflicts of Interest,” each of our officers and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations to another entity pursuant to which such officer or director is or will be required to present a business combination opportunity to such entity. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for an entity to which he or she has then-current fiduciary or contractual obligations, he or she will honor these obligations to present such business combination opportunity to such entity, and only present it to us if such entity rejects the opportunity. These conflicts may not be resolved in our favor and a potential target business may be presented to another entity prior to its presentation to us. Our amended and restated certificate of incorporation will provide that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue.
For a complete discussion of our officers’ and directors’ business affiliations and the potential conflicts of interest that you should be aware of, please see “Management — Directors, Director Nominees, Executive Officers and Executive Officer Nominees,” “Management — Conflicts of Interest” and “Certain Relationships and Related Party Transactions.”
Our officers, directors, security holders and their respective affiliates may have competitive pecuniary interests that conflict with our interests.
We have not adopted a policy that expressly prohibits our directors, officers, security holders or affiliates from having a direct or indirect pecuniary or financial interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or have an interest. In fact, we may enter into a business combination with a target business that is affiliated with our founders, our directors or officers. Nor do we have a policy that expressly prohibits any such persons from engaging for their own account in business activities of the types conducted by us. Accordingly, such persons or entities may have a conflict between their interests and ours.
We may engage in a business combination with one or more target businesses that have relationships with entities that may be affiliated with our founders, officers or directors which may raise potential conflicts of interest.
In light of the involvement of our founders, officers and directors with other entities, we may decide to conduct an initial business combination with one or more businesses affiliated with our founders, officers and directors. Our officers and directors also serve as officers and board members for other entities, including, without limitation, those described under “Management — Conflicts of Interest.” Such entities may compete with us for business combination opportunities. Our founders, officers and directors are not currently aware of any specific opportunities for us to complete our initial business combination with any entities with which they are affiliated, and there have been no preliminary discussions concerning a business combination with any such entity or entities. Although we will not be specifically focusing on, or targeting, any transaction with any affiliated entities, we would pursue such a transaction if we determined that such affiliated entity met our criteria for a business combination as set forth in “Proposed Business — Effecting our initial business combination — Selection of a target business and structuring of our initial business combination” and such transaction was approved by a majority of our independent and disinterested directors. Despite our agreement to obtain an opinion from an independent investment banking firm that is a member of FINRA or from an independent accounting firm, regarding the fairness to our company from a financial point of view of a business combination with one or more domestic or international businesses affiliated with our founders, officers or directors, potential conflicts of interest still may exist and, as a result, the terms of the business combination may not be as advantageous to our public stockholders as they would be absent any conflicts of interest.
Since our initial stockholders will lose their entire investment in us if our initial business combination is not completed (other than with respect to public shares they may acquire during or after this offering), a conflict of interest may arise in determining whether a particular business combination target is appropriate for our initial business combination.
On October 15, 2020, our sponsor purchased an aggregate of 7,187,500 founder shares for an aggregate purchase price of $25,000, or approximately $0.003 per share. In December 2020, our sponsor sold 621,222
founder shares to PA 2 Co-Investment, and in January 2021 sold an aggregate of 266,238 founder shares to Craig-Hallum and certain of its affiliates and an aggregate of 105,000 founder shares to our independent director nominees (20,000 shares to each of Ms. Yaccarino and Messrs. Flanders, Bank and Jashni, and 25,000 to Ms. Turner), in each case at their original per share purchase price. Depending on the extent to which the underwriters’ over-allotment option is not fully exercised, our sponsor may forfeit up to 821,741 founder shares, PA 2 Co-Investment may forfeit up to 81,030 founder shares and Craig-Hallum and certain of its affiliates may forfeit up to 34,729 founder shares. The founder shares will be worthless if we do not complete an initial business combination. In addition, our founders have committed, pursuant to a written agreement, to purchase 702,500 (or 777,500 if the underwriters’ over-allotment option is exercised in full) private placement units, consisting of one private placement share of Class A common stock and one-third of one private placement warrant to purchase one share of Class A common stock, for $10.00 per private placement unit, or an aggregate amount of $7,025,000 (or $7,775,000 if the underwriters’ over-allotment option is exercised in full), in a private placement that will close simultaneously with the closing of this offering. Each private placement warrant will be exercisable to purchase one share of our Class A common stock at a price of $11.50 per share, subject to adjustment as provided herein. The private placement warrants and, in light of the waivers described below, the private placement shares will be worthless if we do not complete our initial business combination.
The founder shares and private placement shares are identical to the shares of common stock included in the units being sold in this offering, except that: (1) the founder shares and private placement shares are subject to certain transfer restrictions, as described in more detail below; (2) our initial stockholders have entered into a letter agreement with us, pursuant to which they have agreed to: (a) waive their redemption rights with respect to their founder shares, private placement shares and any public shares held by them in connection with the completion of our initial business combination; (b) waive their redemption rights with respect to their founder shares, private placement shares and any public shares held by them in connection with a stockholder vote to approve an amendment to our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we have not consummated our initial business combination within 24 months from the closing of this offering; and (c) waive their rights to liquidating distributions from the trust account with respect to any founder shares and private placement shares they hold if we fail to complete our initial business combination within 24 months from the closing of this offering (although they will be entitled to liquidating distributions from the trust account with respect to any public shares they hold if we fail to complete our initial business combination within the prescribed time frame); (3) the founder shares are automatically convertible into shares of our Class A common stock at the time of our initial business combination on a one-for-one basis, subject to adjustment pursuant to certain anti-dilution rights, as described in more detail below; and (4) the founder shares and private placement shares are entitled to registration rights .
The personal and financial interests of our founders, officers and directors may influence their motivation in identifying and selecting a target business combination, completing an initial business combination and influencing the operation of the business following the initial business combination. This risk may become more acute as the 24-month deadline following the closing of this offering nears, which is the deadline for the completion of our initial business combination.
Our management may not be able to maintain control of a target business after our initial business combination. We cannot provide assurance that, upon loss of control of a target business, new management will possess the skills, qualifications or abilities necessary to profitably operate such business.
We may structure our initial business combination so that the post-transaction company in which our public stockholders own shares will own less than 100% of the equity interests or assets of a target business, but we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for us not to be required to register as an investment company under the Investment Company Act. We will not consider any transaction that does not meet such criteria. Even if the post-transaction company owns 50% or more of the voting securities of the target, our stockholders prior to our initial business combination may collectively own a minority interest in the post business combination company, depending on valuations ascribed to the target and us in the initial business combination. For example, we could pursue a transaction in which we issue a substantial number of new shares of common
stock in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% interest in the target. However, as a result of the issuance of a substantial number of new shares of common stock, our stockholders immediately prior to such transaction could own less than a majority of our outstanding shares of common stock subsequent to such transaction. In addition, other minority stockholders may subsequently combine their holdings resulting in a single person or group obtaining a larger share of the company’s stock than we initially acquired. Accordingly, this may make it more likely that our management will not be able to maintain our control of the target business.
Our initial stockholders will hold a substantial interest in us. As a result, they may exert a substantial influence on actions requiring stockholder vote, potentially in a manner that you do not support.
Upon the closing of this offering, our initial stockholders will own 20% of our outstanding common stock (assuming they do not purchase any units in this offering and such 20% ownership not including any private placement securities which may be owned by or deemed to be beneficially owned by our initial stockholders or any securities issued upon conversion of working capital loans). Accordingly, they may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not support, including amendments to our amended and restated certificate of incorporation. If our initial stockholders purchase any units in this offering or if our initial stockholders purchase any additional shares of Class A common stock in the aftermarket or in privately negotiated transactions, this would increase their control. However, our initial stockholders have no current intention to purchase additional securities, other than as described in this prospectus. Factors that would be considered in making such additional purchases would include consideration of the current trading price of our Class A common stock. In addition, our board of directors, whose members were elected by our sponsor, is and will be divided into three classes, each of which will generally serve for three years with only one class of directors being elected in each year. We may not hold an annual meeting of stockholders to elect new directors prior to the completion of our business combination, in which case all of the current directors will continue in office until at least the completion of the business combination. If there is an annual meeting, as a consequence of our “staggered” board of directors, only a minority of the board of directors will be considered for election and our initial stockholders because of their ownership position, will have considerable influence regarding the outcome. Accordingly, our initial stockholders will continue to exert control at least until the completion of our business combination.
Provisions in our amended and restated certificate of incorporation and Delaware law and other agreements may have the effect of discouraging lawsuits against our directors and officers.
Our amended and restated certificate of incorporation will require, to the fullest extent permitted by law, that derivative actions brought in our name, actions against directors, officers and employees for breach of fiduciary duty and other similar actions may be brought only in the Court of Chancery in the State of Delaware and, if brought outside of Delaware, the stockholder bringing such suit will be deemed to have consented to service of process on such stockholder’s counsel. This provision may have the effect of discouraging lawsuits against our directors and officers. Additionally, other agreements may have venue provisions that may limit our securityholders’ ability to bring claims in judicial forums that it finds favorable for disputes with our company, which may discourage such lawsuits.
The forum selection provision is intended to apply to the fullest extent permitted by applicable law to the above-specified types of actions and proceedings, including, to the extent permitted by the federal securities laws, to lawsuits asserting both the claims subject to the forum selection provision and federal securities law claims. However, application of the forum selection provision may in some instances be limited by applicable law. For example, the forum selection provision will not apply to suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder because the Exchange Act creates exclusive federal jurisdiction over all such actions. It could apply, however, to a lawsuit asserting both claims subject to the forum selection provision and claims under the Securities Act, because the Securities Act creates concurrent jurisdiction for federal and state courts over suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. There is uncertainty as to whether a court would enforce this provision with respect to claims under the Securities Act, and our stockholders cannot waive compliance with the federal securities laws or the rules and regulations thereunder.
Our warrant agreement will designate the courts of the State of New York or the United States District Court for the Southern District of New York as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by holders of our warrants, which could limit the ability of warrant holders to obtain a favorable judicial forum for disputes with our company.
Our warrant agreement will provide that, subject to applicable law, (i) any action, proceeding or claim against us arising out of or relating in any way to the warrant agreement, including under the Securities Act, will be brought and enforced in the courts of the State of New York or the United States District Court for the Southern District of New York, and (ii) that we irrevocably submit to such jurisdiction, which jurisdiction shall be the exclusive forum for any such action, proceeding or claim. We will waive any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum.
Notwithstanding the foregoing, these provisions of the warrant agreement will not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal district courts of the United States of America are the sole and exclusive forum. Any person or entity purchasing or otherwise acquiring any interest in any of our warrants shall be deemed to have notice of and to have consented to the forum provisions in our warrant agreement. If any action, the subject matter of which is within the scope the forum provisions of the warrant agreement, is filed in a court other than a court of the State of New York or the United States District Court for the Southern District of New York (for purposes of this subsection, a “foreign action”) in the name of any holder of our warrants, such holder shall be deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located in the State of New York in connection with any action brought in any such court to enforce the forum provisions (for purposes of this subsection, an “enforcement action”), and (y) having service of process made upon such warrant holder in any such enforcement action by service upon such warrant holder’s counsel in the foreign action as agent for such warrant holder.
This choice-of-forum provision may limit a warrant holder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with our company, which may discourage such lawsuits. Alternatively, if a court were to find this provision of our warrant agreement inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially and adversely affect our business, financial condition and results of operations and result in a diversion of the time and resources of our management and board of directors.
General Risk Factors
We are a company with no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective.
We are a recently formed company with no operating results, and we will not commence operations until obtaining funding through this offering. Because we lack an operating history, you have no basis upon which to evaluate our ability to achieve our business objective of completing our initial business combination with one or more target businesses. We have no plans, arrangements or understandings with any prospective target business concerning a business combination and may be unable to complete our initial business combination. If we fail to complete our initial business combination, we will never generate any operating revenues.
Our independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a “going concern.”
As of October 15, 2020, we had $25,000 in cash and a working capital deficiency of approximately $100,000. Further, we have incurred and expect to continue to incur significant costs in pursuit of our acquisition plans. Management’s plans to address this need for capital through this offering are discussed in the section of this prospectus titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Our plans to raise capital and to consummate our initial business combination may not be successful. These factors, among others, raise substantial doubt about our ability to continue as a
going concern. The financial statements contained elsewhere in this prospectus do not include any adjustments that might result from our inability to consummate this offering or our inability to continue as a going concern.
Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, including our ability to negotiate and complete our initial business combination, and results of operations.
We are subject to laws and regulations enacted by national, regional and local governments. In particular, we will be required to comply with certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations and their interpretation and application may also change from time to time and those changes could have a material adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business, including our ability to negotiate and complete our initial business combination, and results of operations.
The determination of the offering price of our units and the size of this offering is more arbitrary than the pricing of securities and size of an offering of an operating company in a particular industry. You may have less assurance, therefore, that the offering price of our units properly reflects the value of such units than you would have in a typical offering of an operating company.
Prior to this offering there has been no public market for any of our securities. The public offering price of the units and the terms of the warrants were negotiated between us and the underwriters. In determining the size of this offering, management held customary organizational meetings with representatives of the underwriters, both prior to our inception and thereafter, with respect to the state of capital markets, generally, and the amount the underwriters believed they reasonably could raise on our behalf. Factors considered in determining the size of this offering, prices and terms of the units, including the Class A common stock and warrants underlying the units, include:
•
the history and prospects of companies whose principal business is the acquisition of other companies;
•
prior offerings of those companies;
•
our prospects for acquiring an operating business at attractive values;
•
a review of debt to equity ratios in leveraged transactions;
•
our capital structure;
•
an assessment of our management and their experience in identifying operating companies;
•
general conditions of the securities markets at the time of this offering; and
•
other factors as were deemed relevant.
Although these factors were considered, the determination of our offering price is more arbitrary than the pricing of securities of an operating company in a particular industry since we have no historical operations or financial results.
We are an emerging growth company and a smaller reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies and smaller reporting companies, this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.
We are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our 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. As a result, our stockholders may not have access to certain information they may deem important. We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier, including if the market value of our common stock held by non-affiliates exceeds $700 million as of the end of any second quarter of a fiscal year, in which case we would no longer be an emerging growth company as of the end of such fiscal year. We cannot predict whether investors will find our securities less attractive because we will rely on these exemptions. If some investors find our securities less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.
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 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. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. We have elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Additionally, we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our common stock held by non-affiliates exceeds $250 million as of the prior June 30th, or (2) our annual revenues exceeded $100 million during such completed fiscal year and the market value of our common stock held by non-affiliates exceeds $700 million as of the prior June 30th. To the extent we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other public companies difficult or impossible.
Cyber incidents or attacks directed at us could result in information theft, data corruption, operational disruption and/or financial loss.
We depend on digital technologies, including information systems, infrastructure and cloud applications and services, including those of third parties with which we may deal. Sophisticated and deliberate attacks on, or security breaches in, our systems or infrastructure, or the systems or infrastructure of third parties or the cloud, could lead to corruption or misappropriation of our assets, proprietary information and sensitive or confidential data. As an early stage company without significant investments in data security protection, we may not be sufficiently protected against such occurrences. We may not have sufficient resources to adequately protect against, or to investigate and remediate any vulnerability to, cyber incidents. It is possible that any of these occurrences, or a combination of them, could have adverse consequences on our business and lead to financial loss.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements contained in this prospectus may constitute “forward-looking statements” for purposes of the federal securities laws. 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. 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 prospectus may include, for example, statements about:
•
our ability to select an appropriate target business or businesses;
•
our ability to complete our initial business combination;
•
our expectations around the performance of a prospective target business or businesses;
•
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 our initial business combination;
•
our potential ability to obtain additional financing to complete our initial business combination;
•
our pool of prospective target businesses, including the location and industry of such target businesses;
•
our ability to consummate an initial business combination due to the uncertainty resulting from the COVID-19 pandemic;
•
the ability of our officers and directors to generate a number of potential business combination opportunities;
•
our public securities’ potential liquidity and trading;
•
the lack of a market for our securities;
•
the use of proceeds not held in the trust account or available to us from interest income on the trust account balance;
•
the trust account not being subject to claims of third parties; or
•
our financial performance following this offering.
The forward-looking statements contained in this prospectus 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” beginning on page 36. 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.
USE OF PROCEEDS
We are offering 25,000,000 units at an offering price of $10.00 per unit. We estimate that the net proceeds of this offering together with the funds we will receive from the sale of the private placement units will be used as set forth in the following table.
| |
|
|
Without
Over-Allotment
Option
|
|
|
Over-Allotment
Option
Exercised
|
|
|
Gross proceeds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross proceeds from units offered to public(1)
|
|
|
|
$ |
250,000,000 |
|
|
|
|
$ |
287,500,000 |
|
|
|
Gross proceeds from private placement units offered in the private placement
|
|
|
|
|
7,025,000 |
|
|
|
|
|
7,775,000 |
|
|
|
Total gross proceeds
|
|
|
|
$ |
257,025,000 |
|
|
|
|
$ |
295,275,000 |
|
|
|
Estimated offering expenses(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting commissions (2.0% of gross proceeds from units offered to public)
|
|
|
|
$ |
5,000,000 |
|
|
|
|
$ |
5,750,000 |
|
|
|
Legal fees and expenses
|
|
|
|
|
225,000 |
|
|
|
|
|
225,000 |
|
|
|
Printing and engraving expenses
|
|
|
|
|
25,000 |
|
|
|
|
|
25,000 |
|
|
|
Accounting fees and expenses
|
|
|
|
|
52,000 |
|
|
|
|
|
52,000 |
|
|
|
SEC expenses
|
|
|
|
|
31,366 |
|
|
|
|
|
31,366 |
|
|
|
FINRA expenses
|
|
|
|
|
43,625 |
|
|
|
|
|
43,625 |
|
|
|
Nasdaq application and filing fees(3)
|
|
|
|
|
63,000 |
|
|
|
|
|
63,000 |
|
|
|
Directors and officers insurance premiums
|
|
|
|
|
500,000 |
|
|
|
|
|
500,000 |
|
|
|
Miscellaneous expenses(4)
|
|
|
|
|
60,009 |
|
|
|
|
|
60,009 |
|
|
|
Total estimated offering expenses (other than underwriting commissions)
|
|
|
|
$ |
1,000,000 |
|
|
|
|
$ |
1,000,000 |
|
|
|
Proceeds after offering expenses
|
|
|
|
$ |
251,025,000 |
|
|
|
|
$ |
288,525,000 |
|
|
|
Held in trust account(5)
|
|
|
|
$ |
250,000,000 |
|
|
|
|
$ |
287,500,000 |
|
|
|
% of public offering size
|
|
|
|
|
100% |
|
|
|
|
|
100% |
|
|
|
Not held in trust account
|
|
|
|
$ |
1,025,000 |
|
|
|
|
$ |
1,025,000 |
|
|
The following table shows the use of the $1,025,000 of net proceeds not held in the trust account.(6)
| |
|
|
Amount
|
|
|
% of
Total
|
|
|
Legal, accounting, due diligence, travel and other expenses in connection with any business combination(7)
|
|
|
|
$ |
300,000 |
|
|
|
|
|
29.3% |
|
|
|
Legal and accounting fees related to regulatory reporting obligations
|
|
|
|
|
100,000 |
|
|
|
|
|
9.8 |
|
|
|
Payment for office space, utilities, general office and secretarial support, and administrative and support services
|
|
|
|
|
480,000 |
|
|
|
|
|
46.8 |
|
|
|
Working capital to cover miscellaneous expenses (including franchise taxes net of anticipated interest income)
|
|
|
|
|
145,000 |
|
|
|
|
|
14.1 |
|
|
|
Total
|
|
|
|
$ |
1,025,000 |
|
|
|
|
|
100.0% |
|
|
(1)
Includes amounts payable to public stockholders who properly redeem their shares in connection with our successful completion of our initial business combination.
(2)
A portion of the offering expenses have been paid from the proceeds of loans from our sponsor of up to $300,000 as described in this prospectus. As of October 15, 2020, we had not borrowed any amount under the promissory note with our sponsor. Subsequent to October 15, 2020, we borrowed $300,000 under the promissory note with our sponsor. These loans will be repaid upon completion of this offering
out of the unused portion of such borrowed funds and out of the $1,000,000 of offering proceeds that has been allocated for the payment of offering expenses (other than underwriting commissions) not held in the trust account. In the event that offering expenses are less than as set forth in this table, any such amounts will be used for post-closing working capital expenses. In the event that the offering expenses are more than as set forth in this table, we may fund such excess with funds not held in the trust account.
(3)
Includes application fee and annual fee for 2021. Does not include $70,000 Nasdaq initial listing fee, which fee Nasdaq has agreed to defer until 2022.
(4)
Includes organizational and administrative expenses and may include amounts related to above-listed expenses in the event actual amounts exceed estimates.
(5)
On the completion of our initial business combination, all amounts held in the trust account will be disbursed directly by the trustee or released to us to pay amounts due to any public stockholders who properly exercise their redemption rights, to pay all or a portion of the consideration payable to the target or owners of the target of our initial business combination, and to pay other expenses associated with our initial business combination, including the Marketing Fee of $8,750,000 (or up to $10,062,500 if the underwriters’ over-allotment option is exercised in full).
(6)
These expenses are estimates only. Our actual expenditures for some or all of these items may differ from the estimates set forth herein. For example, we may incur greater legal and accounting expenses than our current estimates in connection with negotiating and structuring a business combination based upon the level of complexity of such business combination. In the event we identify a business combination target in a specific industry subject to specific regulations, we may incur additional expenses associated with legal due diligence and the engagement of special legal counsel. In addition, our staffing needs may vary and as a result, we may engage a number of consultants to assist with legal and financial due diligence. We do not anticipate any change in our intended use of proceeds, other than fluctuations among the current categories of allocated expenses, which fluctuations, to the extent they exceed current estimates for any specific category of expenses, would not be available for our expenses. The amount in the table above does not include interest available to us from the trust account. The payment for office space, utilities, general office and secretarial support, and administrative and support services in the table above assumes the consummation of our initial business combination takes the maximum 24 months. Based on current interest rates, we would expect the trust account to generate approximately $250,000 of interest annually following the investment of such funds in specified U.S. Government Treasury bills or in specified money market funds; however, this is an estimate and we can provide no assurances regarding this amount. This estimate assumes an interest rate of 0.1% per annum based upon current yields of securities in which the trust account may be invested. In addition, in order to fund working capital deficiencies or finance transaction costs in connection with an intended initial business combination, our sponsor or its affiliates or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete our initial business combination, we would repay such loaned amounts out of the proceeds of the trust account released to us. Otherwise, such loans would be repaid only out of funds held outside the trust account. Up to $1,500,000 of such loans may be convertible at the time of the business combination and at the option of the lender at a price of $10.00 per unit into units consisting of one share of Class A common stock and one-third of one warrant to purchase one share of Class A common stock at a price of $11.50 per share. The units would be identical to the private placement units issued to our founders. PA 2 Co-Investment and Craig-Hallum, and their respective affiliates, will not provide any such working capital loans or receive any such units into which such loans are convertible.The terms of such loans, if any, have not been determined and no written agreements exist with respect to such loans. We do not expect to seek loans from parties other than our sponsor, management team or their affiliates as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account.
(7)
Includes estimated amounts that may also be used in connection with our initial business combination to fund a “no shop” provision and commitment fees for financing.
Nasdaq listing rules provide that at least 90% of the gross proceeds from this offering and the sale of the private placement units be deposited in a trust account. Of the net proceeds of this offering and the sale of the private placement units, $250,000,000 (or $287,500,000 if the underwriters’ over-allotment option is
exercised in full), including the Marketing Fee of $8,750,000 (or up to $10,062,500 if the underwriters’ over-allotment option is exercised in full), will, upon the consummation of this offering, be placed in a U.S.-based trust account with Continental Stock Transfer & Trust Company acting as trustee. The funds in the trust account will be invested only in U.S. government treasury bills with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act. Based on current interest rates, we estimate that the interest earned on the trust account will be approximately $250,000 per year, assuming an interest rate of 0.1% per year; however, this is an estimate and we can provide no assurances regarding this amount. We will not be permitted to withdraw any of the principal or interest held in the trust account except for the withdrawal of interest to pay our franchise and income taxes, and the funds held in the trust account will not be released from the trust account until the earliest of: (1) the completion of our initial business combination; (2) the redemption of any public shares properly tendered in connection with a stockholder vote to amend our amended and restated certificate of incorporation to modify the substance and timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering; and (3) the redemption of all of our public shares if we are unable to complete our initial business combination within 24 months from the closing of this offering, subject to applicable law. Based on current interest rates, we expect that interest earned on the trust account will be sufficient to pay our franchise and income taxes.
The net proceeds held in the trust account may be used as consideration to pay the sellers of a target business with which we ultimately complete our initial business combination. If our initial business combination is paid for using equity or debt securities or not all of the funds released from the trust account are used for payment of the consideration in connection with our initial business combination or used for redemption of our public shares, we may apply the balance of the cash released to us from the trust account for general corporate purposes, including for maintenance or expansion of operations of post-transaction businesses, the payment of principal or interest due on indebtedness incurred in completing our initial business combination, to fund the purchase of other companies or for working capital. There is no limitation on our ability to raise funds privately or through loans in connection with our initial business combination.
We believe that amounts not held in trust will be sufficient to pay the costs and expenses to which such proceeds are allocated. This belief is based on the fact that while we may begin preliminary due diligence of a target business in connection with an indication of interest, we intend to undertake in-depth due diligence, depending on the circumstances of the relevant prospective business combination, only after we have negotiated and signed a letter of intent or other preliminary agreement that addresses the terms of a business combination. However, if our estimate of the costs of undertaking in-depth due diligence and negotiating a business combination is less than the actual amount necessary to do so, we may be required to raise additional capital, the amount, availability and cost of which is currently unascertainable. If we are required to seek additional capital, we could seek such additional capital through loans or additional investments from our founders, members of our management team or any of their affiliates, but such persons are not under any obligation to loan funds to, or invest in, us.
We will enter into an Administrative Services Agreement pursuant to which we will pay to our sponsor a total of $20,000 per month, for up to 24 months, for office space, utilities, general office and secretarial support, administrative and support services. Upon completion of our initial business combination or our liquidation, we will cease paying these monthly fees.
Our sponsor has agreed to loan us up to $300,000 to be used for a portion of the expenses of this offering. As of October 15, 2020, we had not borrowed any amount under the promissory note with our sponsor. Subsequent to October 15, 2020, we borrowed $300,000 under the promissory note with our sponsor. These loans are non-interest bearing, unsecured and are due at the earlier of September 30, 2021 or the closing of this offering. These loans will be repaid upon completion of this offering out of the unused portion of such borrowed funds and out of the $1,000,000 of offering proceeds that has been allocated for the payment of offering expenses (other than underwriting commissions) not held in the trust account.
In addition, in order to fund working capital deficiencies or finance transaction costs in connection with an intended initial business combination, our sponsor, management team or their affiliates may, but are not obligated to, loan us funds as may be required. If we complete our initial business combination, we would repay such loaned amounts out of the proceeds of the trust account released to us. Otherwise, such loans
would be repaid only out of funds held outside the trust account. Up to $1,500,000 of such loans may be convertible at the time of the business combination and at the option of the lender at a price of $10.00 per unit into units consisting of one share of Class A common stock and one-third of one warrant to purchase one share of Class A common stock at a price of $11.50 per share. The units would be identical to the private placement units issued to our founders. PA 2 Co-Investment and Craig-Hallum, and their respective affiliates, will not provide any such working capital loans or receive any such units into which such loans are convertible. The terms of such loans, if any, have not been determined and no written agreements exist with respect to such loans. We do not expect to seek loans from parties other than our sponsor, management team or their affiliates as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account.
If we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our founders, directors, officers or any of their affiliates may also purchase shares in privately negotiated transactions or in the open market either prior to or following the completion of our initial business combination. Please see “Proposed Business — Permitted purchases of our securities” for a description of how such persons will determine from which stockholders to seek to acquire shares. The price per share paid in any such transaction may be different than the amount per share a public stockholder would receive if it elected to redeem its shares in connection with our initial business combination. However, such persons have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. If they engage in such transactions, they will not make any such purchases when they are in possession of any material non-public information not disclosed to the seller or if such purchases are prohibited by Regulation M under the Exchange Act. We do not currently anticipate that such purchases, if any, would constitute a tender offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private rules under the Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject to such rules, the purchasers will comply with such rules.
We may not redeem our public shares in an amount that would cause our net tangible assets, after payment of the Marketing Fee, to be less than $5,000,001 (so that we do not then become subject to the SEC’s “penny stock” rules) and the agreement for our initial business combination may require as a closing condition that we have a minimum net worth or a certain amount of cash. If too many public stockholders exercise their redemption rights so that we cannot satisfy the net tangible asset requirement or any net worth or cash requirements, we would not proceed with the redemption of our public shares or the business combination, and instead may search for an alternate business combination.
A public stockholder will be entitled to receive funds from the trust account only upon the earlier to occur of: (1) the completion of our initial business combination; (2) the redemption of any public shares properly tendered in connection with a stockholder vote to amend our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering; and (3) the redemption of all of our public shares if we are unable to complete our initial business combination within 24 months from the closing of this offering, subject to applicable law. In no other circumstances will a public stockholder have any right or interest of any kind to or in the trust account.
Our initial stockholders have entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares, private placement shares and any public shares held by them in connection with the completion of our initial business combination. In addition, our initial stockholders have agreed to waive their redemption rights with respect to their founder shares, private placement shares and any public shares held by them in connection with a stockholder vote to approve an amendment to our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we have not consummated our initial business combination within 24 months from the closing of this offering. Our initial stockholders have also agreed to waive their rights to liquidating distributions from the trust account with respect to their founder shares and private placement shares if we fail to complete our initial business combination within the prescribed time frame. However, if any of our initial stockholders acquires public shares in or after this offering, they will be entitled to liquidating distributions from the trust account with respect to such public shares if we fail to complete our initial business combination within the prescribed time frame.
DIVIDEND POLICY
We have not paid any cash dividends on our common stock to date and do not intend to pay cash dividends prior to the completion of our initial business combination. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of our initial business combination. The payment of any cash dividends subsequent to our initial business combination will be within the discretion of our board of directors at such time. In addition, our board of directors is not currently contemplating and does not anticipate declaring any stock dividends in the foreseeable future. Further, if we incur any indebtedness in connection with our initial business combination, our ability to declare dividends may be limited by restrictive covenants we may agree to in connection therewith.
DILUTION
The difference between the public offering price per share of Class A common stock, assuming no value is attributed to the warrants included in the units we are offering pursuant to this prospectus or the private placement units, and the pro forma net tangible book value per share of our Class A common stock after this offering constitutes the dilution to investors in this offering. Such calculation does not reflect any dilution associated with the sale and exercise of warrants, including the private placement warrants, which would cause the actual dilution to the public stockholders to be higher, particularly where a cashless exercise is utilized. Net tangible book value per share is determined by dividing our net tangible book value, which is our total tangible assets less total liabilities (including the value of Class A common stock which may be redeemed for cash), by the number of outstanding shares of our Class A common stock.
At October 15, 2020, our net tangible book deficit was $99,614, or approximately $0.01 per share of common stock. After giving effect to the sale of 25,000,000 shares of Class A common stock included in the units we are offering by this prospectus (or 28,750,000 shares if the underwriters’ over-allotment option is exercised in full), the sale of 702,500 shares of Class A common stock included in the private placement units (or 777,500 shares if the underwriters’ over-allotment option is exercised in full) and the deduction of underwriting commissions and estimated expenses of this offering, our pro forma net tangible book value at October 15, 2020 would have been $5,000,008 or $0.68 per share (or $5,000,008 or $0.60 per share if the underwriters’ over-allotment option is exercised in full), representing an immediate increase in net tangible book value (as decreased by the value of 24,603,997 shares of Class A common stock that may be redeemed for cash and assuming no exercise of the underwriters’ over-allotment option, or 28,353,997 shares of Class A common stock if the underwriters’ over-allotment option is exercised in full) of $0.69 per share (or of $0.61 per share if the underwriters’ over-allotment option is exercised in full) to our initial stockholders as of the date of this prospectus. The dilution to new investors if the underwriters exercise their over-allotment option in full would be an immediate dilution of $9.32 per share or 93.2% (or $9.40 per share or 94.0% if the underwriters’ over-allotment option is exercised in full).
The following table illustrates the dilution to the public stockholders on a per-share basis, assuming no value is attributed to the warrants included in the units or the private placement warrants:
| |
|
|
Without Over-allotment
|
|
|
With Over-allotment
|
|
|
Public offering price
|
|
|
|
|
|
|
|
|
|
$ |
10.00 |
|
|
|
|
|
|
|
|
|
|
$ |
10.00 |
|
|
|
Net tangible book deficit before this offering
|
|
|
|
|
(0.01) |
|
|
|
|
|
|
|
|
|
|
|
(0.01) |
|
|
|
|
|
|
|
|
|
Increase attributable to public stockholders
|
|
|
|
|
0.69 |
|
|
|
|
|
|
|
|
|
|
|
0.61 |
|
|
|
|
|
|
|
|
|
Pro forma net tangible book value after this offering and the sale of the private placement units
|
|
|
|
|
|
|
|
|
|
|
0.68 |
|
|
|
|
|
|
|
|
|
|
|
0.60 |
|
|
|
Dilution to public stockholders
|
|
|
|
|
|
|
|
|
|
$ |
9.32 |
|
|
|
|
|
|
|
|
|
|
$ |
9.40 |
|
|
|
Percentage of dilution to public stockholders
|
|
|
|
|
|
|
|
|
|
|
93.2% |
|
|
|
|
|
|
|
|
|
|
|
94.0% |
|
|
For purposes of presentation, we have reduced our pro forma net tangible book value after this offering (assuming no exercise of the underwriters’ over-allotment option) by $246,039,970 because holders of up to approximately 98.4% of our public shares may redeem their shares for a pro rata share of the aggregate amount then on deposit in the trust account at a per share redemption price equal to the amount in the trust account as set forth in our tender offer or proxy materials (initially anticipated to be the aggregate amount held in trust two business days prior to the commencement of our tender offer or stockholders meeting, including interest earned on the funds held in the trust account and not previously released to us to pay our franchise and income taxes, divided by the number of shares of Class A common stock sold in this offering).
The following table sets forth information with respect to our initial stockholders and the public stockholders:
| |
|
|
Shares Purchased
|
|
|
Total Consideration
|
|
|
Average Price
per Share
|
|
| |
|
|
Number
|
|
|
Percentage
|
|
|
Amount
|
|
|
Percentage
|
|
|
Initial Stockholders(1)(2)
|
|
|
|
|
6,952,500 |
|
|
|
|
|
21.8% |
|
|
|
|
$ |
7,050,000 |
|
|
|
|
|
2.7% |
|
|
|
|
$ |
1.01 |
|
|
|
Public Stockholders
|
|
|
|
|
25,000,000 |
|
|
|
|
|
78.2 |
|
|
|
|
|
250,000,000 |
|
|
|
|
|
97.3% |
|
|
|
|
$ |
10.00 |
|
|
| |
|
|
|
|
31,952,500 |
|
|
|
|
|
100.0% |
|
|
|
|
$ |
257,050,000 |
|
|
|
|
|
100.0% |
|
|
|
|
|
|
|
|
(1)
Comprised of 6,250,000 founder shares and 702,500 private placement units. Assumes the full forfeiture of 937,500 shares of Class F common stock that are subject to forfeiture by our founders depending on the extent to which the underwriters’ over-allotment option is exercised.
(2)
Assumes conversion of the founder shares into Class A common stock on a one-for-one basis. The dilution to public stockholders would increase to the extent that the anti-dilution provisions of the founder shares result in the issuance of shares of Class A common stock on a greater than one-to-one basis upon such conversion.
The pro forma net tangible book value per share after this offering is calculated as follows:
| |
|
|
Without
Over-allotment
|
|
|
With
Over-allotment
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net tangible book deficit before this offering
|
|
|
|
$ |
(99,614) |
|
|
|
|
$ |
(99,614) |
|
|
|
Net proceeds from this offering and sale of the private placement units
|
|
|
|
|
251,025,000 |
|
|
|
|
|
288,525,000 |
|
|
|
Plus: Offering costs paid in advance, excluded from tangible book value before this offering
|
|
|
|
|
114,592 |
|
|
|
|
|
114,592 |
|
|
|
Less: Proceeds held in trust subject to redemption
|
|
|
|
|
(246,039,970) |
|
|
|
|
|
(283,539,970) |
|
|
| |
|
|
|
$ |
5,000,008 |
|
|
|
|
$ |
5,000,008 |
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class F common stock outstanding prior to this offering
|
|
|
|
|
7,187,500 |
|
|
|
|
|
7,187,500 |
|
|
|
Class F common stock forfeited if over-allotment is not exercised
|
|
|
|
|
(937,500) |
|
|
|
|
|
— |
|
|
|
Class A common stock included in the units offered
|
|
|
|
|
25,000,000 |
|
|
|
|
|
28,750,000 |
|
|
|
Class A common stock included in the private placement units offered
|
|
|
|
|
702,500 |
|
|
|
|
|
777,500 |
|
|
|
Less: Shares subject to redemption
|
|
|
|
|
(24,603,997) |
|
|
|
|
|
(28,353,997) |
|
|
| |
|
|
|
|
7,348,503 |
|
|
|
|
|
8,361,003 |
|
|
CAPITALIZATION
The following table sets forth our capitalization at October 15, 2020 and as adjusted to give effect to the filing of our amended and restated certificate of incorporation, the sale of our units in this offering and the private placement units and the application of the estimated net proceeds derived from the sale of such securities:
| |
|
|
October 15, 2020
|
|
| |
|
|
Actual
|
|
|
As Adjusted(1)
|
|
|
Note payable to related party(2)
|
|
|
|
$ |
— |
|
|
|
|
$ |
— |
|
|
|
Class A common stock subject to possible redemption; -0- and 24,603,997 shares, actual and as adjusted, respectively(3)
|
|
|
|
|
— |
|
|
|
|
|
246,039,970 |
|
|
|
Preferred stock, $0.0001 par value, -0- and 5,000,000 shares authorized, actual and as adjusted, respectively; none issued and outstanding, actual and as adjusted
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
Class A common stock, $0.0001 par value, -0- and 500,000,000 shares authorized, actual and as adjusted, respectively; -0- and 1,098,503 shares issued and outstanding (excluding -0- and 24,603,997 shares subject to possible redemption), actual and as adjusted, respectively
|
|
|
|
|
— |
|
|
|
|
|
110 |
|
|
|
Class F common stock, $0.0001 par value, 10,000,000 and 25,000,000 shares authorized, actual and as adjusted, respectively; 7,187,500 and 6,250,000 shares issued and outstanding, actual and as adjusted, respectively(4)
|
|
|
|
|
719 |
|
|
|
|
|
625 |
|
|
|
Additional paid-in capital(5)
|
|
|
|
|
24,281 |
|
|
|
|
|
5,009,295 |
|
|
|
Accumulated deficit
|
|
|
|
|
(10,022) |
|
|
|
|
|
(10,022) |
|
|
|
Total stockholders’ equity
|
|
|
|
$ |
14,978 |
|
|
|
|
$ |
5,000,008 |
|
|
|
Total capitalization
|
|
|
|
$ |
14,978 |
|
|
|
|
$ |
251,039,978 |
|
|
(1)
Assumes the full forfeiture of 937,500 shares that are subject to forfeiture by our founders depending on the extent to which the underwriters’ over-allotment option is exercised. The proceeds of the sale of such shares will not be deposited into the trust account and the shares will not be eligible for redemption from the trust account.
(2)
Our sponsor has agreed to loan us up to $300,000 to be used for a portion of the expenses of this offering. As of October 15, 2020, we had not borrowed any amount under the promissory note with our sponsor. Subsequent to October 15, 2020, we borrowed $300,000 under the promissory note with our sponsor.
(3)
Upon the completion of our initial business combination, we will provide our public stockholders with the opportunity to redeem their public shares for cash equal to their pro rata share of the aggregate amount then on deposit in the trust account as of two business days prior to the consummation of the initial business combination, including interest (which interest shall be net of taxes payable), subject to the limitations described herein whereby our net tangible assets will be maintained at a minimum of $5,000,001 and any limitations (including, but not limited to, cash requirements) created by the terms of the proposed business combination. The value of Class A common stock that may be redeemed is equal to $10.00 per share (which is the assumed redemption price) multiplied by 24,603,997 shares of Class A common stock, which is the maximum number of shares of Class A common stock that may be redeemed for a $10.00 purchase price per share and still maintain at least $5,000,001 of net tangible assets.
(4)
As of October 15, 2020, the Company issued 7,187,500 shares of common stock, par value $0.0001 per share, of which up to 937,500 shares are subject to forfeiture to the extent the underwriters’ over-allotment option is not exercised. The Company will amend its charter to designate the current outstanding shares of common stock into Class F common stock. Actual share amount is prior to any forfeiture of founder shares by our founders and as adjusted share amount assumes no exercise of the underwriters’ over-allotment option.
(5)
The “as adjusted” additional paid-in capital calculation is equal to the “as adjusted” total stockholders’ equity of $5,000,008, less Class A common stock (par value) of $110, less Class F common stock (par value) of $625, plus the accumulated deficit of $10,022.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
We are a blank check company incorporated on September 9, 2020 as a Delaware corporation and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. We have not identified any specific business combination target and we have not, nor has anyone on our behalf, engaged in any substantive discussions, directly or indirectly, with any business combination target. We intend to effectuate our initial business combination using cash from the proceeds of this offering and the sale of the private placement securities, our equity, debt or a combination of cash, equity and debt.
The issuance of additional shares of our stock in a business combination:
•
may significantly dilute the equity interest of investors in this offering, which dilution would increase if the anti-dilution provisions in the founder shares resulted in the issuance of Class A common stock on a greater than one-to-one basis upon conversion of the founder shares;
•
may subordinate the rights of holders of common stock if preferred stock is issued with rights senior to those afforded our common stock;
•
could cause a change of control if a substantial number of shares of our common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors;
•
may have the effect of delaying or preventing a change of control of us by diluting the stock ownership or voting rights of a person seeking to obtain control of us; and
•
may adversely affect prevailing market prices for our Class A common stock and/or warrants.
Similarly, if we issue debt securities or otherwise incur significant indebtedness, it could result in:
•
default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations;
•
acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;
•
our immediate payment of all principal and accrued interest, if any, if the debt is payable on demand;
•
our inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing while the debt security is outstanding;
•
our inability to pay dividends on our common stock;
•
using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our common stock if declared, expenses, capital expenditures, business combinations and other general corporate purposes;
•
limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
•
increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and
•
limitations on our ability to borrow additional amounts for expenses, capital expenditures, business combinations, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt.
As indicated in the accompanying financial statements, as of October 15, 2020, we held cash of $25,000 and deferred offering costs of approximately $115,000. Further, we expect to continue to incur
significant costs in the pursuit of our business combination plans. We cannot assure you that our plans to raise capital or to complete our initial business combination will be successful.
RESULTS OF OPERATIONS AND KNOWN TRENDS OR FUTURE EVENTS
We have neither engaged in any operations nor generated any revenues to date. Our only activities since inception have been organizational activities and those necessary to prepare for this offering. Following this offering, we will not generate any operating revenues until after completion of our initial business combination. We will generate non-operating income in the form of interest income on cash and cash equivalents after this offering. There has been no significant change in our financial or trading position and no material adverse change has occurred since the date of our audited financial statements. After this offering, we expect to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses. We expect our expenses to increase substantially after the closing of this offering.
LIQUIDITY AND CAPITAL RESOURCES
Our liquidity needs have been satisfied prior to the completion of this offering through receipt of $25,000 from the initial sale of the founder shares to our sponsor and up to $300,000 in loans from our sponsor under an unsecured promissory note. As of October 15, 2020, we had not borrowed any amount under the promissory note with our sponsor. Subsequent to October 15, 2020, we borrowed $300,000 under the promissory note with our sponsor. We estimate that the net proceeds from (1) the sale of the units in this offering, after deducting offering expenses of approximately $1,000,000 and underwriting commissions of $5,000,000 ($5,750,000 if the underwriters’ over-allotment option is exercised in full) (excluding the Marketing Fee of $8,750,000 (or up to $10,062,500 if the underwriters’ over-allotment option is exercised in full)), and (2) the sale of the private placement units for a purchase price of $7,025,000 (or $7,775,000 if the underwriters’ over-allotment option is exercised in full), will be $257,025,000 (or $295,275,000 if the underwriters’ over-allotment option is exercised in full). Of this amount, $250,000,000 (or $287,500,000 if the underwriters’ over-allotment option is exercised in full), including the Marketing Fee of $8,750,000 (or up to $10,062,500 if the underwriters’ over-allotment option is exercised in full), will be deposited into the trust account. The funds in the trust account will be invested only in specified U.S. government treasury bills or in specified money market funds. The remaining $1,025,000 will not be held in the trust account. In the event that our offering expenses exceed our estimate of $1,000,000 we may fund such excess with funds not to be held in the trust account. In such case, the amount of funds we intend to be held outside the trust account would decrease by a corresponding amount. Conversely, in the event that the offering expenses are less than our estimate of $1,000,000, the amount of funds we intend to be held outside the trust account would increase by a corresponding amount.
We intend to use substantially all of the funds held in the trust account, including any amounts representing interest earned on the trust account (which interest shall be net of taxes payable and excluding the Marketing Fee) to complete our initial business combination. We may withdraw interest to pay our franchise and income taxes. Delaware franchise tax is based on our authorized shares or on our assumed par and non-par capital, whichever yields a lower result. Under the authorized shares method, each share is taxed at a graduated rate based on the number of authorized shares with a maximum aggregate tax of $200,000 per year. Under the assumed par value capital method, Delaware taxes each $1,000,000 of assumed par value capital at the rate of $350; where assumed par value would be (1) our total gross assets following this offering, divided by (2) our total issued shares of common stock following this offering, multiplied by (3) the number of our authorized shares following this offering. Based on the number of shares of our common stock authorized and outstanding and our estimated total gross proceeds after the completion of this offering, our annual franchise tax obligation is expected to be capped at the maximum amount of annual franchise taxes payable by us as a Delaware corporation of $200,000. Our annual income tax obligations will depend on the amount of interest and other income earned on the amounts held in the trust account. We expect the only taxes payable by us out of the funds in the trust account will be income and franchise taxes. We expect the interest earned on the amount in the trust account will be sufficient to pay our franchise and income taxes. To the extent that our equity or debt is used, in whole or in part, as consideration to complete our initial business combination, the remaining proceeds held in the trust account will be used as
working capital to finance the operations of the target business or businesses, make other business combinations and pursue our growth strategies.
Prior to the completion of our initial business combination, we will have available to us $1,025,000 of proceeds held outside the trust account. We will use these funds primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, structure, negotiate and complete a business combination, and to pay taxes to the extent the interest earned on the trust account is not sufficient to pay our taxes.
In order to fund working capital deficiencies or finance transaction costs in connection with an intended initial business combination, our sponsor, management team or their affiliates may, but are not obligated to, loan us funds as may be required. If we complete our initial business combination, we would repay such loaned amounts. Up to $1,500,000 of such loans may be convertible at the time of the business combination and at the option of the lender at a price of $10.00 per unit into units consisting of one share of Class A common stock and one-third of one warrant to purchase one share of Class A common stock at a price of $11.50 per share. The units would be identical to the private placement units issued to our founders. PA 2 Co-Investment and Craig-Hallum, and their respective affiliates, will not provide any such working capital loans or receive any such units into which such loans are convertible. The terms of such loans, if any, have not been determined and no written agreements exist with respect to such loans. We do not expect to seek loans from parties other than our sponsor, management team or their affiliates as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account.
We expect our primary liquidity requirements during that period to include approximately $300,000 for legal, accounting, due diligence, travel and other expenses in connection with any business combinations; $100,000 for legal and accounting fees related to regulatory reporting requirements; $480,000 for office space, utilities, general office and secretarial support, and administrative and support services; and approximately $145,000 for general working capital that will be used for miscellaneous expenses (including the Nasdaq initial listing fee, which fee Nasdaq has agreed to defer until 2022, and Nasdaq continued listing fees).
These amounts are estimates and may differ materially from our actual expenses. In addition, we could use a portion of the funds not being placed in trust to pay commitment fees for financing, fees to consultants to assist us with our search for a target business or as a down payment or to fund a “no-shop” provision (a provision designed to keep target businesses from “shopping” around for transactions with other companies or investors on terms more favorable to such target businesses) with respect to a particular proposed business combination, although we do not have any current intention to do so. If we entered into an agreement where we paid for the right to receive exclusivity from a target business, the amount that would be used as a down payment or to fund a “no-shop” provision would be determined based on the terms of the specific business combination and the amount of our available funds at the time. Our forfeiture of such funds (whether as a result of our breach or otherwise) could result in our not having sufficient funds to continue searching for, or conducting due diligence with respect to, prospective target businesses.
We do not believe we will need to raise additional funds following this offering in order to meet the expenditures required for operating our business. However, if our estimates of the costs of identifying a target business, undertaking in-depth due diligence and negotiating an initial business combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our initial business combination. Moreover, we may need to obtain additional financing either to complete our initial business combination or because we become obligated to redeem a significant number of our public shares upon completion of our initial business combination, in which case we may issue additional securities or incur debt in connection with such business combination.
CONTROLS AND PROCEDURES
We are not currently required to maintain an effective system of internal controls as defined by Section 404 of the Sarbanes-Oxley Act. We will be required to comply with the internal control requirements of the Sarbanes-Oxley Act for the fiscal year ending December 31, 2021. Only in the event that we are
deemed to be a large accelerated filer or an accelerated filer, and no longer an emerging growth company, would we be required to comply with the independent registered public accounting firm attestation requirement. Further, for as long as we remain an emerging growth company as defined in the JOBS Act, we intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirement.
Prior to the closing of this offering, we have not completed an assessment, nor have our independent registered public accounting firm tested our systems, of internal controls. We expect to assess the internal controls of our target business or businesses prior to the completion of our initial business combination and, if necessary, to implement and test additional controls as we may determine are necessary in order to state that we maintain an effective system of internal controls. A target business may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding the adequacy of internal controls. Many small and mid-sized target businesses we may consider for our initial business combination may have internal controls that need improvement in areas such as:
•
staffing for financial, accounting and external reporting areas, including segregation of duties;
•
reconciliation of accounts;
•
proper recording of expenses and liabilities in the period to which they relate;
•
evidence of internal review and approval of accounting transactions;
•
documentation of processes, assumptions and conclusions underlying significant estimates; and
•
documentation of accounting policies and procedures.
Because it will take time, management involvement and perhaps outside resources to determine what internal control improvements are necessary for us to meet regulatory requirements and market expectations for our operation of a target business, we may incur significant expenses in meeting our public reporting responsibilities, particularly in the areas of designing, enhancing, or remediating internal and disclosure controls. Doing so effectively may also take longer than we expect, thus increasing our exposure to financial fraud or erroneous financing reporting.
Once our management’s report on internal controls is complete, we will retain our independent registered public accounting firm to audit and render an opinion on such report when required by Section 404 of the Sarbanes-Oxley Act. The independent registered public accounting firm may identify additional issues concerning a target business’s internal controls while performing their audit of internal control over financial reporting.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The net proceeds of this offering and the sale of the private placement units held in the trust account will be invested in U.S. government treasury bills with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.
RELATED PARTY TRANSACTIONS
On October 15, 2020, our sponsor purchased an aggregate of 7,187,500 founder shares for an aggregate purchase price of $25,000, or approximately $0.003 per share. The purchase price of the founder shares was determined by dividing the amount of cash contributed to the company by the number of founder shares issued. In December 2020, our sponsor sold 621,222 founder shares to PA 2 Co-Investment, and in January 2021 sold an aggregate of 266,238 founder shares to Craig-Hallum and certain of its affiliates and an aggregate of 105,000 founder shares to our independent director nominees (20,000 shares to each of Ms. Yaccarino and Messrs. Flanders, Bank and Jashni, and 25,000 to Ms. Turner), in each case at their original per share purchase price. Depending on the extent to which the underwriters’ over-allotment option is not fully exercised, our sponsor may forfeit up to 821,741 founder shares, PA 2 Co-Investment may forfeit up
to 81,030 founder shares and Craig-Hallum and certain of its affiliates may forfeit up to 34,729 founder shares. Our founders do not currently intend to purchase any units in this offering.
We will enter into an Administrative Services Agreement pursuant to which we will pay to our sponsor a total of $20,000 per month, for up to 24 months for office space, utilities, general office and secretarial support, and administrative and support services. Upon completion of our initial business combination or our liquidation, we will cease paying these monthly fees.
Our founders, officers and directors or any of their respective affiliates will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. Our audit committee will review on a quarterly basis all payments that were made to our founders, officers, directors or our or any of their affiliates and will determine which expenses and the amount of expenses that will be reimbursed. There is no cap or ceiling on the reimbursement of out-of-pocket expenses incurred by such persons in connection with activities on our behalf.
Our sponsor has agreed to loan us up to $300,000 under an unsecured promissory note to be used for a portion of the expenses of this offering. As of October 15, 2020, we had not borrowed any amount under the promissory note with our sponsor. Subsequent to October 15, 2020, we borrowed $300,000 under the promissory note with our sponsor. These loans are non-interest bearing, unsecured and are due at the earlier of September 30, 2021 or the closing of this offering. These loans will be repaid upon completion of this offering out of the unused portion of such borrowed funds and out of the $1,000,000 of offering proceeds that has been allocated for the payment of offering expenses (other than underwriting commissions) not held in the trust account.
In addition, in order to fund working capital deficiencies or finance transaction costs in connection with an intended initial business combination, our sponsor, management team or their affiliates may, but are not obligated to, loan us funds as may be required. If we complete our initial business combination, we would repay such loaned amounts out of the proceeds of the trust account released to us. Otherwise, such loans would be repaid only out of funds held outside the trust account. Up to $1,500,000 of such loans may be convertible at the time of the business combination and at the option of the lender at a price of $10.00 per unit into units consisting of one share of Class A common stock and one-third of one warrant to purchase one share of Class A common stock at a price of $11.50 per share. The units would be identical to the private placement units issued to our founders. PA 2 Co-Investment and Craig-Hallum, and their respective affiliates, will not provide any such working capital loans or receive any such units into which such loans are convertible. The terms of such loans, if any, have not been determined and no written agreements exist with respect to such loans. We do not expect to seek loans from parties other than our sponsor, management team or their affiliates as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account.
Our founders have committed, pursuant to a written agreement, to purchase an aggregate of 702,500 (or 777,500 if the underwriters’ over-allotment option is exercised in full) private placement units at a price of $10.00 per private placement unit ($7,025,000 in the aggregate or $7,775,000 in the aggregate if the underwriters’ over-allotment option is exercised in full) in a private placement that will occur simultaneously with the closing of this offering. Each private placement unit consists of one private placement share of Class A common stock and one-third of one private placement warrant exercisable to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment as provided herein. Our founders will be permitted to transfer the private placement securities held by them to certain permitted transferees, including our officers and directors and other persons or entities affiliated with or related to them, but the transferees receiving such securities will be subject to the same agreements with respect to such securities as are our founders. Otherwise, these private placement securities will not, subject to certain limited exceptions, be transferable or salable until 30 days after the completion of our initial business combination. The private placement warrants will be non-redeemable so long as they are held by our initial stockholders or their permitted transferees (except as described below under “Principal Stockholders — Transfers of Founder Shares and Private Placement Securities”). The private placement warrants may also be exercised by our initial stockholders or their permitted transferees for cash or on a cashless basis. Otherwise, the private placement warrants have terms and provisions that are identical to those of the warrants being sold as part of the units in this offering.
Our anchor investor has expressed to us an interest to purchase up to 1,300,000 units in the aggregate in this offering. The anchor investor has subscribed for membership interests in our sponsor representing an indirect beneficial interest in up to 184,890 founder shares and 25,977 private placement units (or up to 212,621 founder shares and 28,750 private placement units if the underwriters’ over-allotment option is exercised in full).
The price paid by the anchor investor for the aforementioned indirect ownership of our founder shares and private placement units is the same, proportionally, as that paid by the other members of our sponsor, collectively, for the rest of such membership interests (excluding interests held directly by members of our management, directors and advisors outside of their interests in our sponsor).
There can be no assurance that the anchor investor will acquire any units in this offering, or as to the amount of such units the anchor investor will retain, if any, prior to or upon the consummation of our initial business combination. In the event that the anchor investor purchases such units (either in this offering or after), it has agreed to vote any shares that it holds (including any public shares that it holds) in favor of our initial business combination, and a smaller portion of affirmative votes from other public shareholders would be required to approve our initial business combination. As a result of the private placement units that our anchor investor holds, it may have different interests with respect to a vote on an initial business combination than other public stockholders.
Our anchor investor will not have any rights to the funds held in the trust account beyond the rights afforded to our public stockholders, as described herein.
Pursuant to a registration rights agreement we will enter into with our initial stockholders on or prior to the closing of this offering, we may be required to register certain securities for sale under the Securities Act. These holders, and holders of shares or warrants issued upon conversion of working capital loans, if any, are entitled under the registration rights agreement to make up to three demands that we register certain of our securities held by them for sale under the Securities Act and to have the securities covered thereby registered for resale pursuant to Rule 415 under the Securities Act. In addition, these holders have the right to include their securities in other registration statements filed by us. However, the registration rights agreement provides that we will not permit any registration statement filed under the Securities Act to become effective until the securities covered thereby are released from their lock-up restrictions, as described herein. We will bear the costs and expenses of filing any such registration statements. See “Certain Relationships and Related Party Transactions.”
We will also pay to Cowen and Company, LLC, one of the underwriters of this offering and an affiliate of one of our founders, and Craig-Hallum Capital Group LLC, one of the underwriters in this offering and one of our founders, an underwriting discount of $0.20 per unit purchased by it in this offering. We have also engaged the underwriters as advisors in connection with our business combination, pursuant to the Business Combination Marketing Agreement described under “Underwriting — Business Combination Marketing Agreement.” We will pay to the underwriters the Marketing Fee for such services upon the consummation of our initial business combination in an amount equal to, in the aggregate, 3.5% of the gross proceeds of this offering, including any proceeds from the full or partial exercise of the underwriters’ over-allotment option. As a result, the underwriters will not be entitled to such fee unless we consummate our initial business combination.
OFF-BALANCE SHEET ARRANGEMENTS; COMMITMENTS AND CONTRACTUAL OBLIGATIONS; QUARTERLY RESULTS
As of October 15, 2020, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K and did not have any commitments or contractual obligations. No unaudited quarterly operating data is included in this prospectus as we have conducted no operations to date.
JOBS ACT
On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We will qualify as an “emerging growth company” and under the JOBS Act will be allowed to comply with new or revised
accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an “emerging growth company”, we choose to rely on such exemptions we may not be required to, among other things: (1) provide an independent registered public accounting firm’s attestation report on our system of internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act; (2) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act; (3) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the independent registered public accounting firm’s report providing additional information about the audit and the financial statements (auditor discussion and analysis); and (4) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our initial public offering or until we are no longer an “emerging growth company,” whichever is earlier.
PROPOSED BUSINESS
GENERAL
We are a blank check company incorporated on September 9, 2020 as a Delaware corporation and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this prospectus as our initial business combination. We have not identified any specific business combination target and we have not, nor has anyone on our behalf, engaged in any substantive discussions, directly or indirectly, with any business combination target.
We will seek to capitalize on the exceptional operating experience and vast network of our management team and advisors across the technology, media and telecommunications landscape, as well as the capital markets. Although we may pursue our initial business combination in any sector, industry or geographic location, we currently intend to focus on opportunities that capitalize on the expertise and abilities of our management team to identify, acquire and operate a business in the broadly-defined technology, media and telecommunications market. There are several market verticals we have identified which are undergoing unprecedented levels of disruption over an extraordinarily accelerated timeframe due to a variety of trends, making them attractive pools for business combination candidates. At a high level, these trends include a tectonic shift in the velocity, magnitude of and manner in which content is consumed by consumers; increased time spent and intensity of engagement by consumers on new platforms and technologies; the accelerated digital and remote transition in areas such as social platforms, interactive entertainment, gaming, education and health and wellness; the importance of content and other value-added ancillary services as a tool to drive e-commerce, subscription services and other forms of monetization; and emphasis on scale driving operators to seek partnerships or exit.
Our team has been custom-built specifically with these trends in mind. We believe that our management team’s deep industry expertise and insight ranging across these disruptive trends provide us with a unique value proposition to potential business combination candidates. In addition to our extensive operating experience, we have been key members of teams that have sourced, negotiated and executed various investments, acquisitions and other business partnerships with, or on behalf of, leading global organizations in the broader technology, media and telecommunications sector.
We intend to focus our search for an initial business combination on companies with enterprise valuations in the range of $750 million to $2.0 billion or more. We believe that our management’s extensive experience investing in, acquiring, operating and growing businesses in this space and size range, coupled with our vast network of leading industry executives, board members, entrepreneurs, investors and deal makers, provide us with unique insights and access to key decision makers. We believe this collective experience, real-time market intelligence and vast network will translate to strong deal flow enabling us to source deals effectively and consummate an initial business combination.
Our Team
Adam Rothstein serves as our Executive Chairman and board member. Mr. Rothstein is a Co-Founder and General Partner of Disruptive Technology Partners, an Israeli technology-focused early-stage investment fund, and Disruptive Growth, a collection of late-stage investment vehicles focused on Israeli technology, which he co-founded in 2013 and 2014 respectively. Since 2014, Mr. Rothstein has been a Venture Partner in Subversive Capital, and the Managing Member of 1007 Mountain Drive Partners, LLC, which are both consulting and investment vehicles. Mr. Rothstein is also a sponsor and director of Roth CH Acquisition I Co. (NASDAQ: ROCH), a special purpose acquisition company that has entered into an agreement and plan of merger with PureCycle Technologies LLC pursuant to which Roth CH Acquisition I Co. will acquire PureCycle Technologies LLC, Roth CH Acquisition II Co. (NASDAQ: ROCCU), which is a special purpose acquisition company, and Subversive Capital Acquisition Corp. (NEO: SVC.A.U) (OTCQX: SBVCF), a special purpose acquisition company that has just announced the acquisition of Caliva, Left Coast Ventures, and Sisu. Mr. Rothstein has over 20 years of investment experience, and currently sits on the boards of directors of several early- and mid-stage technology and media companies both in the US and in Israel and is on the Advisory Board for the Leeds School of Business at the University of Colorado, Boulder.
Emiliano Calemzuk serves as our Chief Executive Officer and a board member. Mr. Calemzuk is a media executive and entrepreneur with 20 years of experience in the international media and management space. He currently serves as the Lead Independent Director and Chairman of the Nominating and Corporate Governance at MercadoLibre, Inc. (Nasdaq: MELI), an e-commerce and payments platform in Latin America. Mr. Calemzuk was recently Co-Founder and CEO of RAZE, a Los Angeles-based media venture which produces traditional and social content geared toward a Hispanic and Latin American audience in the United States. RAZE was acquired by WarnerMedia’s Turner Latin America in July 2020. In 2015 and 2016 Mr. Calemzuk partnered with Time Inc., publisher of Time, Sports Illustrated, People, and other major magazine titles to assist with Time Inc.’s entry into digital video. In 2013 and 2014 Mr. Calemzuk joined Jeff Sagansky’s and Harry Sloan’s $400 million special purpose acquisition company, Silver Eagle Acquisition Company, as target company Chief Executive Officer designate. Mr. Calemzuk had a 14-year career at 21st Century Fox / News Corp in the C-suite. He served as Chief Executive Officer of Shine Group Americas, a unit of 21st Century Fox, from 2010 to 2012. In this capacity Mr. Calemzuk oversaw scripted and non-scripted hit television series such as. From 2007 to 2010, Mr. Calemzuk served as President of Fox Television. From 2002 to 2007 Mr. Calemzuk was based in Rome, Italy, as President of FOX International Channels Europe where he managed the operation of the FOX Italian TV group. In addition, Mr. Calemzuk supervised the FOX operation in Spain, France, Germany, Turkey, and Eastern Europe. Before moving to Rome, Mr. Calemzuk was Vice President and Deputy Managing Director of FOX Latin American Channels. In 2000 Mr. Calemzuk held the post of General Manager of Fox Kids Latin America.
Michael Del Nin has agreed to serve as our Chief Financial Officer and Chief Operating Officer commencing prior to the closing of this offering. Mr. Del Nin was the Co-Chief Executive Officer of Central European Media Enterprises Ltd. (Nasdaq: CETV), one of Europe’s leading television broadcasters, from September 2013 until its sale in October 2020, and was a member of its Board of Directors from October 2009 until September 2013. Mr. Del Nin previously was the Senior Vice President of International and Corporate Strategy at Time Warner Inc. from 2008 until 2013, in which capacity he helped drive Time Warner Inc.’s global strategy and business development initiatives, with a particular focus on international operations and investments. From 2006 to 2008, Mr. Del Nin was the Senior Vice President responsible for Mergers and Acquisitions at Time Warner Inc. Mr. Del Nin’s prior experience includes roles at New Line Cinema, as Senior Vice President, Business Development, and as an investment banker at Salomon Smith Barney focused on the media industry.
Linda Yaccarino has agreed to serve as a board member commencing upon the effectiveness of the registration statement of which this prospectus forms a part. As Chairman of Global Advertising and Partnerships at NBCUniversal, Ms. Yaccarino is responsible for managing over $10 billion in revenue annually and stewarding the company’s portfolio of linear networks, digital platforms, distribution partnerships, and client relationships. At NBCUniversal, Ms. Yaccarino, with the help of her 1,500-person team, connects established and emerging brands to hundreds of millions of viewers. Ms. Yaccarino also leads a joint Global Advertising & Partnerships team at NBCUniversal, which oversees the company’s One Platform offering worldwide. Ms. Yaccarino is the Chairman of the World Economic Forum’s Taskforce on Future of Work, and the Vice Chairman of The Advertising Council. Ms. Yaccarino sits on the Board of Directors of Ascena Retail Group (OTC: ASNAQ) and is a member of the President’s Council on Sports, Fitness, and Nutrition.
Kelli Turner has agreed to serve as a board member commencing upon the effectiveness of the registration statement of which this prospectus forms a part. Ms. Turner is currently President and Chief Operating Officer at SESAC, Inc., a music rights licensing company. She is also general partner of RSL Venture Partners and was on the Board of Directors of Central European Media Enterprises Ltd. (Nasdaq: CETV), a media and entertainment company operating in Central and Eastern European markets, until its sale in October 2020. She was previously President and Chief Financial Officer of RSL Management Corporation from February 2011 to April 2012. Ms. Turner previously was Chief Financial Officer and Executive Vice President of Martha Stewart Living Omnimedia, Inc., a diversified media and merchandising company, from 2009 to 2011, where she was responsible for all aspects of the company’s financial operations, while working closely with the executive team in shaping Martha Stewart Living Omnimedia, Inc.’s business strategy and capital allocation process. A lawyer and a registered certified public accountant with significant experience in the media industry, Ms. Turner joined Martha Stewart Living Omnimedia, Inc. in 2009 from Time Warner Inc., where she held the position of Senior Vice President, Operations in the
Office of the Chairman and Chief Executive Officer. Prior to that, she served as Senior Vice President, Business Development for New Line Cinema from 2006 to 2007 after having served as Time Warner Inc.’s Vice President, Investor Relations from 2004 to 2006. Ms. Turner worked in investment banking for years with positions at Allen & Company and Salomon Smith Barney prior to joining Time Warner Inc. Early in her career, she also gained tax and audit experience as a certified public accountant at Ernst & Young, LLP.
David Bank has agreed to serve as a board member commencing upon the effectiveness of the registration statement of which this prospectus forms a part. Mr. Bank is Executive Vice President, Corporate Development and Strategy for A+E Networks. He was named to the role in July 2019 and is responsible for long-term strategic and business development plans, including identifying potential partners in the marketplace, and exploring opportunities that align with the company’s forecasted objectives. Mr. Bank is a veteran analyst and financial professional with expertise in the media and entertainment industry. Prior to joining A+E Networks, he served as Executive Vice President, Investor Relations at CBS Corp. Previously, Mr. Bank had a 16-year career as a sell-side equity research analyst and Managing Director at RBC Capital Markets where he primarily covered Large Cap Media and Entertainment Companies. He also served as Associate Director of The US Equity Research Department at RBC Capital Markets. Mr. Bank began his career as an investment banker focusing on financial institutions at First Boston, then joined Furman Selz as an Investment Banker focused on Media.
Scott Flanders has agreed to serve as a board member commencing upon the effectiveness of the registration statement of which this prospectus forms a part. In his current role as Chief Executive Officer for eHealth, Inc. (Nasdaq: EHTH), Mr. Flanders has managed the company through vast industry changes. In addition to eHealth, Inc., Mr. Flanders has served as Chief Executive Officer of The Columbia House Company, Freedom Communications and Playboy Enterprises.
Jon Jashni has agreed to serve as a board member commencing upon the effectiveness of the registration statement of which this prospectus forms a part. Mr. Jashni is a media investor, advisor and content executive who providcs services through his consulting firm Raintree Ventures. He is currently a Founding Advisor to Influence Media, a music fund allied with Warner Music, and Sreda Global, a leading Russian TV studio. Mr. Jashni also serves as a strategic advisor to such entities as Mass Appeal, Bonfire Game Studios, Prometheus Entertainment and Wevr and is a Founding Partner of Synthesis Entertainment. Over the course of his career, Mr. Jashni has been associated with the creation and monetization of content that has generated over $7 billion in gross revenue. From 2006 to 2016, Mr. Jashni was Co-Founder, President and Chief Creative Officer of Legendary Entertainment. During his 10-year tenure at the company he was integral to establishing and evolving the company into a leading, diversified, multi-platform media company. Comprised of film, television, digital and comics divisions, Legendary Entertainment is dedicated to owning, producing and delivering mainstream content to global audiences. Mr. Jashni has been a lead participant in corporate transactions involving such companies as Time Warner, Comcast NBCUniversal, Fidelity, Waddell & Reed, Softbank and Wanda (which purchased Legendary Entertainment in 2016). Mr. Jashni has also been involved in the acquisition and scaling of a vanguard applied analytics entity which developed proprietary methodologies for optimizing media buying, leveraging social media and finely calibrating consumer interactions. Prior to co-founding and joining Legendary Entertainment, Mr. Jashni was President of Hyde Park Entertainment, President of Irving Azoff’s Warner Bros-based Giant Pictures, Senior Vice President of Production at 20th Century Fox and Creative Executive at Columbia Pictures.
We will further be supported by our team of advisors from leading global companies with experience in a wide range of subsectors and functional areas. This support is intended to provide us with access to their expertise and extensive industry networks from which we plan to source and evaluate targets as well as devise plans to optimize any business that we acquire.
Our team of advisors includes:
Greg Coleman. Greg Coleman is an Executive in Residence at Lerer Hippeau Ventures and sits on numerous boards at the intersection of technology, media and advertising including BuzzFeed Japan, LoopMe, Skimlinks and Botify. Most recently, Mr. Coleman was the President of BuzzFeed and Criteo, an advertising technology company. Mr. Coleman has previously held roles as President and Chief Revenue Officer at the Huffington Post and the EVP of Global Sales at Yahoo.
Beth Gulas. Beth Gulas is a consultant to high profile executives and talent, and acts as a global resource to a variety of industries and individuals. Ms. Gulas has used her skills as an experienced consultant to anticipate, evaluate and manage critical issues such as strategic thinking and managing change, cross-functional teams, leadership development and coaching for both small and large organizations over the course of her career.
Andy Kleinman. Andy Kleinman brings over 20 years of experience working on innovation at the intersection of technology and entertainment. Mr. Kleinman’s latest company, Wonder, created the first mobile operating system capable of turning a smartphone into a gaming and entertainment console. Prior to Wonder, Mr. Kleinman was an early executive and Chief Business Officer at Scopely. Prior to Scopely, Mr. Kleinman was Vice President of International at Zynga.
John Kosner. John Kosner brings four decades of leadership experience across the sports media landscape. Today, Mr. Kosner is president of Kosner Media, a digital media and sports consultancy firm. In 2018, Mr. Kosner and the late NBA Commissioner Emeritus David Stern created Micromanagement Ventures, a portfolio of sports technology start-ups. Previously, Mr. Kosner led ESPN digital media from 2003 to 2017, and prior to that held similar leadership roles at Sports Illustrated, NBA, CBS Sports and NBC Sports.
With respect to the above, past performance of our management team or advisors is not a guarantee of either (i) success with respect to a business combination that may be consummated or (ii) the ability to successfully identify and execute a transaction. You should not rely on the historical record of management or our advisors as indicative of future performance. Not all members of our management or advisors have past experience with a blank check company or special purpose acquisition company. For a list of our executive officers, executive officer nominees and entities for which a conflict of interest may or does exist between such officers and the company, please refer to “Management — Conflicts of Interest.”
OUR MARKET OPPORTUNITY
Our business combination and value creation strategy is to identify and complete our initial business combination with a growth-oriented, market-leading company in an industry that complements the collective investment experience and expertise of our management team to build long-term shareholder value. The broader technology, media and telecommunications markets are undergoing an unprecedented level of disruption at an increasing rate, as consumer habits broadly migrate toward digital offerings. The secular forces behind this disruption are rapidly evolving, as the broad digitalization across all industries has been rapidly accelerated by the effects of the COVID-19 pandemic, resulting in a growing ecosystem of companies, properties and assets which we believe are well positioned to thrive in this digital-first world.
Some of these secular forces include:
•
The shift of content consumption to a direct-to-consumer distribution paradigm, including user generated content;
•
An enhanced ability to leverage a single content or technology asset base over a global total addressable marketplace;
•
Increased time spent by consumers on new platforms and technologies;
•
Greater urgency and desire for consumers to engage digitally in various activities (social, sports and entertainment, education, health and wellness, etc.);
•
A dynamic and rapidly evolving regulatory environment across numerous areas, including changes in data privacy and security practices and compliance, distribution platforms for digital apps and services like Apple and Google, industry specific measures and a fractured geopolitical landscape with countries like China;
•
Volatility in the C-suite of many major legacy companies, re-aligning priorities and strategies;
•
The importance of premium content and other value-added ancillary services as a tool to drive e-commerce, subscription services and other forms of monetization; and
•
Emphasis on scale driving operators to seek partnership or exit.
We believe that this evolving landscape in combination with volatility in the capital markets has created a robust environment of high-quality growth platforms considering strategic alternatives and seeking to scale through both organic initiatives and strategic combinations. We also believe there may also be an accelerating pace of non-core, but high-quality, divestitures that are likely to accompany a rapidly changing C-suite environment and regulatory environment at many global technology, media and telecommunications companies where long-term strategies are now being scrutinized and re-evaluated.
BUSINESS STRATEGY
Our intent is to identify and complete our initial business combination with a company that capitalizes on these market opportunities, complements the experience of our management and board teams, and can benefit from our unique combination of team’s collective skills. The unique domain operating expertise, global network of potential acquisition and financial expertise that our executive management team, board of directors and advisory board members possess will be a significant competitive advantage in capitalizing on opportunities within this environment. Select examples of the specific verticals we expect to focus on include:
•
Online and mobile gaming content and platforms;
•
Sports media and technologies including sports wagering and eSports;
•
Edu-tainment platforms;
•
Fitness, health and wellness platforms;
•
Over the top (OTT) entertainment, including subscription video on demand (SVOD) / advertising video on demand (AVOD);
•
Evolving broadcasting technology;
•
Studio and content production;
•
Music streaming and podcasting;
•
Advertising technologies; and
•
Digitally enabled marketplaces, services and platforms.
Our team has been purposefully assembled with these key macro trends and targeted verticals in mind. We intend to identify and execute operating company acquisitions where we can add value directly through our operating and financial expertise as well as through strategic and financial partnerships to drive cross-synergies and increased efficiency.
Our team has collectively achieved success at a wide variety of legacy companies and emerging growth platforms, many of which were publicly traded. All members of our team have played key executive operating roles and/or board members and/or investors at these organizations. In addition, the key roles played by this team have often included key growth initiatives at legacy business into new geographies or products. Some of the organizations that our team have previously been affiliated with include:
| |
A+E Networks
|
|
|
Mercado Libre
|
|
| |
Akamai
|
|
|
NBCUniversal
|
|
| |
Allen & Co.
|
|
|
Playboy
|
|
| |
Buzzfeed
|
|
|
RBC Capital Markets
|
|
| |
CBS
|
|
|
Salomon Smith Barney
|
|
| |
Central European Media
|
|
|
SESAC
|
|
| |
Cisco
|
|
|
Sky
|
|
| |
Criteo
|
|
|
SNAP
|
|
| |
Disney/ESPN
|
|
|
Sony
|
|
| |
E-Health
|
|
|
The EW Scripps Company
|
|
| |
Fox Studios
|
|
|
The National Basketball Association
|
|
| |
Freedom Communications
|
|
|
The White House
|
|
| |
Huffington Post
|
|
|
Time Warner/Turner Networks
|
|
| |
IronSource
|
|
|
Valiant Entertainment
|
|
| |
Legendary Pictures/Legendary China
|
|
|
Vox Media
|
|
| |
Martha Stewart Living
|
|
|
Zynga
|
|
BUSINESS COMBINATION CRITERIA
Consistent with our business strategy, we have identified the following general criteria and guidelines that we believe are important in evaluating prospective target businesses. We will use these criteria and guidelines in evaluating business combination opportunities, but we may decide to enter into our initial business combination with a target business that does not meet these criteria and guidelines.
•
Business with Significant Revenue and Earnings Growth Potential. We will seek to acquire one or more businesses that we believe will have multiple organic and M&A-driven growth opportunities over time. We will search for attractive, growth-oriented businesses that exhibit sound, underlying fundamentals as well as demonstrated revenue growth and a clear path to profitability. This includes such potential targets that are currently, or have the potential to be, a category leader with long-term growth potential.
•
Targets That Can Benefit from our Management Team’s Relationships and Experience. While we may pursue an initial business combination opportunity in any industry or sector, we intend to capitalize on our management team’s domain expertise acquired through decades of strategic deal-making in the media, digital media/consumer technology, interactive entertainment and related industries. We believe our management’s deep network of CEO-level and other C-suite/board relationships in addition to pre-eminent private and public market investors will give us a number of competitive advantages and will present us with a substantial number of potential business combination targets, particularly in the aforementioned industries.
•
Companies with Potential to Benefit from Digital Disruption. We will seek to acquire one or more businesses which currently, or have the potential to, benefit from digital disruption, or a disruption of the traditional business model or market.
•
High-Growth Markets. We will seek out opportunities in higher-growth sectors in the U.S. as well as in selected developed and emerging international markets.
These criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that our management may deem relevant. In the event that we decide to enter into our initial business combination with a target business that does not meet the above criteria and guidelines, we will disclose that the target business does not meet the above criteria in our stockholder communications related to our initial business combination, which, as discussed in this prospectus, would be in the form of tender offer documents or proxy solicitation materials that we would file with the SEC.
In evaluating a prospective target business, we expect to conduct a thorough due diligence review that will encompass, among other things, meetings with incumbent management, document reviews, inspection of facilities, as well as a review of financial, operational, legal and other information which will be made available to us. We will also utilize our operational and capital planning experience.
OUR INITIAL BUSINESS COMBINATION PROCESS
In evaluating a prospective target business, we expect to conduct a thorough due diligence review which will encompass, among other things, meetings with incumbent management, document reviews, inspection of facilities, as well as a review of financial, operational, legal and other information which will be made available to us. We will also utilize our operational and capital planning experience.
We are not prohibited from pursuing an initial business combination with a company that is affiliated with our founders, officers or directors. In the event we seek to complete our initial business combination with a company that is affiliated with our founders, officers or directors, we, or a committee of independent and disinterested directors, will obtain an opinion from an independent investment banking firm that is a member FINRA, or from an independent accounting firm, that our initial business combination is fair to our company from a financial point of view.
If members of our management team acquire public shares or warrants after this offering, they may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate our initial business combination.
We currently do not have any specific business combination under consideration. Certain of the members of our management team are directly or indirectly interested in our founders and their affiliates. Our founders and their affiliates are continuously made aware of potential business opportunities, one or more of which we may desire to pursue, for a business combination, but we have not identified any specific business combination target and we have not, nor has anyone on our behalf, engaged in any substantive discussions, directly or indirectly, with any business combination target. We have not (nor have any of our agents or affiliates) contacted by any candidates (or representative of any candidates) with whom we have had substantive discussions with respect to a possible business combination transaction with us and we will not consider a business combination with any company with whom our sponsor founders have had substantive discussions on our behalf as a business combination candidate prior to completion of this offering. Additionally, we have not, nor has anyone on our behalf, taken any substantive measure, directly or indirectly, to identify or locate any suitable business combination candidate, nor have we engaged or retained any agent or other representative to identify or locate any such business combination candidate.
As more fully discussed in “Management — Conflicts of Interest,” each of our officers and directors presently has, and any of them in the future may have additional fiduciary or contractual obligations to another entity pursuant to which such officer or director is or will be required to present a business combination opportunity to such entity. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for an entity to which he or she has then-current fiduciary or contractual obligations, he or she will honor these obligations to present such business combination opportunity to such entity, and only present it to us if such entity rejects the opportunity. We do not believe, however, that the fiduciary duties or contractual obligations of our officers or directors will materially affect our ability to complete our business combination. Our amended and restated certificate of incorporation will provide that, prior to the consummation of our initial business combination, we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue and the director or officer is permitted to refer that opportunity to us without violating any legal obligation. Our officers and directors would continue to be subject to all other fiduciary duties owed to us and our stockholders and no other waivers of their respective fiduciary obligations have been provided to any such officers and directors. We do not have any plan for any waiver of the fiduciary duties of our officers and directors post-business combination.
Our founders, executive officers and directors have agreed, pursuant to a letter agreement, not to participate in the formation of, or become an officer or director of, any other special purpose acquisition
company with a stated focus on the technology, media and telecommunications industry until we have entered into a definitive agreement regarding our initial business combination or we have failed to complete our initial business combination within 24 months after the closing of this offering. For the avoidance of doubt and notwithstanding the foregoing, our founders, executive officers and directors may participate in the formation of, or become an officer or director of, any other special purpose acquisition company that does not have a stated focus stated focus on the technology, media and telecommunications industry (including those with a stated focus on health technology or medical technology) or that is a successor company to an existing special purpose acquisition company in which any of them is interested at any time and whether or not we have entered into a definitive agreement regarding our initial business combination.
INITIAL BUSINESS COMBINATION
Nasdaq listing rules require that our initial business combination must be with one or more target businesses that together have an aggregate fair market value equal to at least 80% of the value of the trust account (excluding any deferred underwriters fees, if any, and taxes payable on the income earned on the trust account) at the time of our signing a definitive agreement in connection with our initial business combination. We refer to this as the 80% of net assets test. If our board of directors is not able to independently determine the fair market value of the target business or businesses, we will obtain an opinion from an independent investment banking firm that is a member of FINRA, or from an independent accounting firm, with respect to the satisfaction of such criteria.
We anticipate structuring our initial business combination so that the post-transaction company in which our public stockholders own shares will own or acquire 100% of the outstanding equity interests or assets of the target business or businesses. We may, however, structure our initial business combination such that the post-transaction company owns or acquires less than 100% of such interests or assets of the target business in order to meet certain objectives of the target management team or stockholders or for other reasons, but we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended, or the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to our initial business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the initial business combination. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be taken into account for purposes of the 80% of net assets test. If our initial business combination involves more than one target business, the 80% of net assets test will be based on the aggregate value of all of the target businesses.
Prior to the date of this prospectus, we will file a Registration Statement on Form 8-A with the SEC to voluntarily register our securities under Section 12 of the Exchange Act. As a result, we will be subject to the rules and regulations promulgated under the Exchange Act. We have no current intention of filing a Form 15 to suspend our reporting or other obligations under the Exchange Act prior or subsequent to the consummation of our initial business combination.
SOURCING OF POTENTIAL INITIAL BUSINESS COMBINATION TARGETS
We believe our management team’s and advisors’ significant transaction experience, real-time market intelligence and deep network of relationships will provide us with a substantial number of potential initial business combination targets. Over the course of their careers, the members of our management team and advisors have developed a broad network of contacts and corporate relationships around the world. This network has grown through the activities of our management team’s and advisors’ work with and for prominent media and digital media/consumer technology companies, including providing strategic advisory
services to the senior management teams and boards of directors, sourcing, acquiring and financing businesses, the reputation of our management team and advisors for integrity and fair dealing with sellers, financing sources and target management teams and the experience of our management team and advisors in executing transactions under varying economic and financial market conditions.
We believe that the network of contacts and relationships of our management team and advisors will provide us with important sources of business combination opportunities across the subsectors we find attractive. In addition, we anticipate that target business combination candidates will be brought to our attention from various unaffiliated sources, including investment banks and other market participants, private equity funds, founders/entrepreneurs and large business enterprises seeking to divest non-core assets or divisions.
We are not prohibited from pursuing an initial business combination with a company that is affiliated with our founders, executive officers, directors or advisors, or completing the business combination through a joint venture or other form of shared ownership with our founders, executive officers, directors or advisors. In the event we seek to complete an initial business combination with a target that is affiliated with our founders, executive officers, directors or advisors, we, or a committee of independent directors, would obtain an opinion from an independent investment banking firm that is a member of FINRA or an independent accounting firm stating that such an initial business combination is fair to our company from a financial point of view.
Members of our management team and our independent directors and advisors will directly or indirectly own founder shares and/or private placement securities following this offering and, accordingly, may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate our initial business combination. Further, each of our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect to our initial business combination.
As more fully discussed in “Management — Conflicts of Interest,” each of our officers, directors and advisors presently has, and any of them in the future may have additional, fiduciary or contractual obligations to another entity pursuant to which such officer or director is or will be required to present a business combination opportunity to such entity. Accordingly, if any of our officers, directors or advisors becomes aware of a business combination opportunity which is suitable for an entity to which he or she has then current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such business combination opportunity to such other entity. Our amended and restated certificate of incorporation will provide that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of the company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue, and to the extent the director or officer is permitted to refer that opportunity to us without violating another legal obligation. We do not believe, however, that the fiduciary duties or contractual obligations of our officers, directors or advisors will materially affect our ability to complete our initial business combination.
In addition, certain of our officers, directors and advisors currently sponsor and/or serve as officers or directors of, and our sponsor, officers, directors and advisors may in the future sponsor and/or serve as officers, directors or advisors of, other special purpose acquisition companies similar to ours or may pursue other business or investment ventures during the period in which we are seeking an initial business combination. As a result, our sponsor, officers, directors or advisors could have conflicts of interest in determining whether to present business combination opportunities to us or to any other special purpose acquisition company with which they are or may become involved. Although we have no formal policy in place for vetting potential conflicts of interest, our board of directors will review any potential conflicts of interest of our officers or directors on a case-by-case basis. However, we do not believe that any such potential conflicts would materially affect our ability to complete our initial business combination.
STATUS AS A PUBLIC COMPANY
We believe our structure will make us an attractive business combination partner to target businesses. As an existing public company, we offer target businesses an alternative to the traditional initial public offering
through a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination. In this situation, the owners of the target business would exchange their shares of stock in the target business for shares of our stock or for a combination of shares of our stock and cash, allowing us to tailor the consideration to the specific needs of the sellers. Although there are various costs and obligations associated with being a public company, we believe target businesses will find this method a more certain and cost effective method to becoming a public company than the typical initial public offering. In a typical initial public offering, there are additional expenses incurred in marketing, road show and public reporting efforts that may not be present to the same extent in connection with a business combination with us.
Furthermore, once a proposed business combination is completed, the target business will have effectively become public, whereas an initial public offering is always subject to the underwriters’ ability to complete the offering, as well as general market conditions, which could delay or prevent the offering from occurring. Once public, we believe the target business would then have greater access to capital and an additional means of providing management incentives consistent with stockholders’ interests. It can offer further benefits by augmenting a company’s profile among potential new customers and vendors and aid in attracting talented employees.
While we believe that our structure and our management team’s backgrounds will make us an attractive business partner, some potential target businesses may view our status as a blank check company, such as our lack of an operating history and our ability to seek stockholder approval of any proposed initial business combination, negatively.
We are an “emerging growth company,” as defined in the JOBS Act. We 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 this offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the end of the prior fiscal year’s second quarter, and (2) the date on which we have issued more than $1.00 billion in non-convertible debt securities during the prior three-year period.
Additionally, we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our common stock held by non-affiliates exceeds $250 million as of the prior June 30th, or (2) our annual revenues exceeded $100 million during such completed fiscal year and the market value of our common stock held by non-affiliates exceeds $700 million as of the prior June 30th.
FINANCIAL POSITION
With funds available for a business combination initially in the amount of $241,250,000 assuming no redemptions and after payment of the Marketing Fee of $8,750,000 (or $277,437,500 assuming no redemptions and after payment of the Marketing Fee of up to $10,062,500 if the underwriters’ over-allotment option is exercised in full), we offer a target business a variety of options such as creating a liquidity event for its owners, providing capital for the potential growth and expansion of its operations or strengthening its balance sheet by reducing its debt ratio. Because we are able to complete our initial business combination using our cash, debt or equity securities, or a combination of the foregoing, we have the flexibility to use the most efficient combination that will allow us to tailor the consideration to be paid to the target business to fit its needs and desires. However, we have not taken any steps to secure third party financing and there can be no assurance it will be available to us.
EFFECTING OUR INITIAL BUSINESS COMBINATION
We are not presently engaged in, and we will not engage in, any operations for an indefinite period of time following this offering. We intend to effectuate our initial business combination using cash from the proceeds of this offering and the sale of the private placement securities, our equity, debt or a combination of these as the consideration to be paid in our initial business combination. We may seek to complete our
initial business combination with a company or business that may be financially unstable or in its early stages of development or growth, which would subject us to the numerous risks inherent in such companies and businesses.
If our initial business combination is paid for using equity or debt securities or not all of the funds released from the trust account are used for payment of the consideration in connection with our initial business combination or used for redemption of our public shares, we may apply the balance of the cash released to us from the trust account for general corporate purposes, including for maintenance or expansion of operations of post-transaction businesses, the payment of principal or interest due on indebtedness incurred in completing our initial business combination, to fund the purchase of other companies or for working capital.
We have not identified any specific business combination target and we have not, nor has anyone on our behalf, engaged in any substantive discussions, directly or indirectly, with any business combination target. Members of our management team and advisors are continuously made aware of potential business opportunities, one or more of which we may desire to pursue, for a business combination, but we have not (nor has anyone on our behalf) contacted, or had any discussions, formal or otherwise with, any prospective target business with respect to a business combination transaction with us.
We may seek to raise additional funds through a private offering of debt or equity securities in connection with the completion of our initial business combination, and we may effectuate our initial business combination using the proceeds of such offering rather than using the amounts held in the trust account.
In the case of an initial business combination funded with assets other than the trust account assets, our tender offer documents or proxy materials disclosing the business combination would disclose the terms of the financing and, only if required by law, we would seek stockholder approval of such financing. There are no prohibitions on our ability to raise funds privately or through loans in connection with our initial business combination. At this time, we are not a party to any arrangement or understanding with any third party with respect to raising any additional funds through the sale of securities or otherwise.
SELECTION OF A TARGET BUSINESS AND STRUCTURING OF OUR INITIAL BUSINESS COMBINATION
Nasdaq listing rules require that our initial business combination must be with one or more target businesses that together have an aggregate fair market value equal to at least 80% of the value of the trust account (excluding any deferred underwriters fees, if any, and taxes payable on the income earned on the trust account) at the time of our signing a definitive agreement in connection with our initial business combination. The fair market value of the target or targets will be determined by our board of directors based upon one or more standards generally accepted by the financial community, such as discounted cash flow valuation or value of comparable businesses. If our board is not able to independently determine the fair market value of the target business or businesses, we will obtain an opinion from an independent investment banking firm that is a member of FINRA, or from an independent accounting firm, with respect to the satisfaction of such criteria. Our management will have virtually unrestricted flexibility in identifying and selecting one or more prospective target businesses, although we will not be permitted to effectuate our initial business combination with another blank check company or a similar company with nominal operations.
In any case, we will only complete an initial business combination in which we own or acquire 50% or more of the outstanding voting securities of the target or otherwise acquire a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act. If we own or acquire less than 100% of the equity interests or assets of a target business or businesses, the portion of such business or businesses that are owned or acquired by the post-transaction company is what will be taken into account for purposes of the 80% of net assets test. There is no basis for investors in this offering to evaluate the possible merits or risks of any target business with which we may ultimately complete our initial business combination.
To the extent we effect our initial business combination with a company or business that may be financially unstable or in its early stages of development or growth we may be affected by numerous risks
inherent in such company or business. Although our management will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all significant risk factors.
In evaluating a prospective target business, we expect to conduct a thorough due diligence review which will encompass, among other things, meetings with incumbent management, document reviews, inspection of facilities, as well as a review of financial, operational, legal and other information, which will be made available to us.
The time required to select and evaluate a target business and to structure and complete our initial business combination, and the costs associated with this process, are not currently ascertainable with any degree of certainty. Any costs incurred with respect to the identification and evaluation of a prospective target business with which our initial business combination is not ultimately completed will result in our incurring losses and will reduce the funds we can use to complete another business combination.
LACK OF BUSINESS DIVERSIFICATION
For an indefinite period of time after the completion of our initial business combination, the prospects for our success may depend entirely on the future performance of a single business.
Unlike other entities that have the resources to complete business combinations with multiple entities in one or several industries, it is probable that we will not have the resources to diversify our operations and mitigate the risks of being in a single line of business. By completing our initial business combination with only a single entity, our lack of diversification may:
•
subject us to negative economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact on the particular industry in which we operate after our initial business combination; and
•
cause us to depend on the marketing and sale of a single product or limited number of products or services.
LIMITED ABILITY TO EVALUATE THE TARGET’S MANAGEMENT TEAM
Although we intend to closely scrutinize the management of a prospective target business when evaluating the desirability of effecting our initial business combination with that business, our assessment of the target business’s management may not prove to be correct. In addition, the future management may not have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future role of members of our management team, if any, in the target business combination candidate cannot presently be stated with any certainty. The determination as to whether any of the members of our management team will remain with the combined company will be made at the time of our initial business combination. While it is possible that one or more of our directors will remain associated in some capacity with us following our initial business combination, it is unlikely that any of them will devote their full efforts to our affairs subsequent to our initial business combination. Moreover, we cannot assure you that members of our management team will have significant experience or knowledge relating to the operations of the particular target business.
We cannot assure you that any of our key personnel will remain in senior management or advisory positions with the combined company. The determination as to whether any of our key personnel will remain with the combined company will be made at the time of our initial business combination.
Following our initial business combination, we may seek to recruit additional managers to supplement the incumbent management of the target business. We cannot assure you that we will have the ability to recruit additional managers, or that additional managers will have the requisite skills, knowledge or experience necessary to enhance the incumbent management.
STOCKHOLDERS MAY NOT HAVE THE ABILITY TO APPROVE OUR INITIAL BUSINESS COMBINATION
We may conduct redemptions without a stockholder vote pursuant to the tender offer rules of the SEC. However, we will seek stockholder approval if it is required by applicable law or stock exchange rules,
or we may decide to seek stockholder approval for business or other reasons. Presented in the table below is a graphic explanation of the types of initial business combinations we may consider and whether stockholder approval is currently required under Delaware law for each such transaction.
|
Type of Transaction
|
|
|
Whether
Stockholder
Approval is
Required
|
|
|
Purchase of assets
|
|
|
|
|
No |
|
|
|
Purchase of stock of target not involving a merger with the company
|
|
|
|
|
No |
|
|
|
Merger of target into a subsidiary of the company
|
|
|
|
|
No |
|
|
|
Merger of the company with a target
|
|
|
|
|
Yes |
|
|
Under Nasdaq’s listing rules, stockholder approval would be required for our initial business combination if, for example:
•
we issue shares of common stock that will be equal to or in excess of 20% of the number of shares of Class A common stock then outstanding (other than in a public offering);
•
any of our directors, officers or substantial stockholders (as defined by Nasdaq listing rules) has a 5% or greater interest (or such persons collectively have a 10% or greater interest), directly or indirectly, in the target business or assets to be acquired or otherwise and the present or potential issuance of common stock could result in an increase in outstanding shares of common stock or voting power of 5% or more; or
•
the issuance or potential issuance of common stock will result in our undergoing a change of control.
The decision as to whether we will seek stockholder approval of a proposed business combination in those instances in which stockholder approval is not required by law will be made by us, solely in our discretion, and will be based on business and legal reasons, which include a variety of factors, including, but not limited to:
•
the timing of the transaction, including in the event we determine stockholder approval would require additional time and there is either not enough time to seek stockholder approval or doing so would place the company at a disadvantage in the transaction or result in other additional burdens on the company;
•
the expected cost of holding a stockholder vote;
•
the risk that the stockholders would fail to approve the proposed business combination;
•
other time and budget constraints of the company; and
•
additional legal complexities of a proposed business combination that would be time-consuming and burdensome to present to stockholders.
PERMITTED PURCHASES OF OUR SECURITIES
In the event we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our founders, directors, officers or any of their affiliates may purchase shares in privately negotiated transactions or in the open market either prior to or following the completion of our initial business combination. There is no limit on the number of shares such persons may purchase. However, 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. In the event our initial stockholders, directors, officers or any of their affiliates determine to make any such purchases at the time of a stockholder vote relating to our initial business combination, such purchases could have the effect of influencing the vote necessary to approve such transaction. None of the funds in the trust account will be used to purchase shares in such transactions. They will not make any such purchases when they are in possession of any material non-public information not disclosed to the seller or if such purchases are prohibited by Regulation M under the Exchange Act.
Such a purchase may include a contractual acknowledgement that such stockholder, although still the record holder of our shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. Subsequent to the consummation of this offering, we will adopt an insider trading policy which will require insiders to (1) refrain from purchasing securities during certain blackout periods and when they are in possession of any material non-public information and (2) to clear all trades with our legal counsel prior to execution. We cannot currently determine whether our insiders will make such purchases pursuant to a Rule 10b5-1 plan, as it will be dependent upon several factors, including but not limited to, the timing and size of such purchases. Depending on such circumstances, our insiders may either make such purchases pursuant to a Rule 10b5-1 plan or determine that such a plan is not necessary.
In the event that our founders, directors, officers or any of 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. We do not currently anticipate that such purchases, if any, would constitute a tender offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private rules under the Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject to such rules, the purchasers will comply with such rules.
The purpose of such purchases could be to (1) vote such shares in favor of the business combination and thereby increase the likelihood of obtaining stockholder approval of our initial business combination or (2) satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial business combination, where it appears that such requirement would otherwise not be met. This may result in the completion of our initial business combination that may not otherwise have been possible.
In addition, if such purchases are made, the public “float” of our common stock may be reduced and the number of beneficial holders of our securities may be reduced, which may make it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange.
Our founders, officers, directors and/or any of their affiliates anticipate that they may identify the stockholders with whom our founders, officers, directors or any of their affiliates may pursue privately negotiated purchases by either the stockholders contacting us directly or by our receipt of redemption requests submitted by stockholders following our mailing of proxy materials in connection with our initial business combination. To the extent that our founders, officers, directors or any of their affiliates enter into a private purchase, they would identify and contact only potential selling stockholders who have expressed their election to redeem their shares for a pro rata share of the trust account or vote against our initial business combination. Such persons would select the stockholders from whom to acquire shares based on the number of shares available, the negotiated price per share and such other factors as any such person may deem relevant at the time of purchase. The price per share paid in any such transaction may be different than the amount per share a public stockholder would receive if it elected to redeem its shares in connection with our initial business combination. Our founders, officers, directors or any of their affiliates will purchase shares only if such purchases comply with Regulation M under the Exchange Act and the other federal securities laws.
Any purchases by our founders, officers, directors and/or any of their affiliates who are affiliated purchasers under Rule 10b-18 under the Exchange Act will be made only to the extent such purchases are able to be made in compliance with Rule 10b-18, which is a safe harbor from liability for manipulation under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Rule 10b-18 has certain technical requirements that must be complied with in order for the safe harbor to be available to the purchaser. Our founders, officers, directors and/or any of their affiliates will not make purchases of common stock if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act.
REDEMPTION RIGHTS FOR PUBLIC STOCKHOLDERS UPON COMPLETION OF OUR INITIAL BUSINESS COMBINATION
We will provide our public stockholders with the opportunity to redeem all or a portion of their shares of common stock upon the completion of our initial business combination at a per share price, payable in cash, equal to the aggregate amount then on deposit in the trust account as of two business days prior to the
consummation of the initial business combination, including interest earned on the funds held in the trust account and not previously released to us to pay our franchise and income taxes, divided by the number of then outstanding public shares, subject to the limitations described herein. At completion of the business combination, we will be required to purchase any public shares properly delivered for redemption and not withdrawn. The amount in the trust account is initially anticipated to be $10.00 per public share. The per share amount we will distribute to investors who properly redeem their shares will not be reduced by the Marketing Fee we will pay to the underwriters. Our initial stockholders have entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares, private placement shares and any public shares they may acquire during or after this offering in connection with the completion of our initial business combination.
MANNER OF CONDUCTING REDEMPTIONS
We will provide our public stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock upon the completion of our initial business combination either: (1) in connection with a stockholder meeting called to approve the business combination; or (2) by means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed business combination or conduct a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would require us to seek stockholder approval under applicable law or stock exchange listing requirement. Asset acquisitions and stock purchases would not typically require stockholder approval while direct mergers with our company where we do not survive and any transactions where we issue more than 20% of our outstanding common stock or seek to amend our amended and restated certificate of incorporation would typically require stockholder approval. We intend to conduct redemptions without a stockholder vote pursuant to the tender offer rules of the SEC unless stockholder approval is required by applicable law or stock exchange rules or we choose to seek stockholder approval for business or other reasons.
If a stockholder vote is not required and we do not decide to hold a stockholder vote for business or other reasons, we will, pursuant to our amended and restated certificate of incorporation:
•
conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers; and
•
file tender offer documents with the SEC prior to completing our initial business combination which contain substantially the same financial and other information about the initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies.
Upon the public announcement of our initial business combination, we and our sponsor will terminate any plan established in accordance with Rule 10b5-1 to purchase shares of our Class A common stock in the open market if we elect to redeem our public shares through a tender offer, to comply with Rule 14e-5 under the Exchange Act.
In the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial business combination until the expiration of the tender offer period. In addition, the tender offer will be conditioned on public stockholders not tendering more than a specified number of public shares, which number will be based on the requirement that we may not redeem public shares in an amount that would cause our net tangible assets to be less than $5,000,001, after payment of the Marketing Fee (so that we do not then become subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination. If public stockholders tender more shares than we have offered to purchase, we will withdraw the tender offer and not complete such initial business combination.
If, however, stockholder approval of the transaction is required by applicable law or stock exchange rules, or we decide to obtain stockholder approval for business or other reasons, we will, pursuant to our amended and restated certificate of incorporation:
•
conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer rules; and
•
file proxy materials with the SEC.
We expect that a final proxy statement would be mailed to public stockholders at least 10 days prior to the stockholder vote. However, we expect that a draft proxy statement would be made available to such stockholders well in advance of such time, providing additional notice of redemption if we conduct redemptions in conjunction with a proxy solicitation. Although we are not required to do so, we currently intend to comply with the substantive and procedural requirements of Regulation 14A in connection with any stockholder vote even if we are not able to maintain our Nasdaq listing or Exchange Act registration.
In the event that we seek stockholder approval of our initial business combination, we will distribute proxy materials and, in connection therewith, provide our public stockholders with the redemption rights described above upon completion of the initial business combination.
If we seek stockholder approval, we will complete our initial business combination only if a majority of the outstanding shares of common stock voted are voted in favor of the business combination. In such case, pursuant to the terms of a letter agreement entered into with us, our initial stockholders have agreed (and their permitted transferees will agree) (and our anchor investor has agreed, pursuant to a written agreement) to vote their founder shares, private placement shares and any public shares held by them in favor of our initial business combination. We expect that at the time of any stockholder vote relating to our initial business combination, our initial stockholders and their permitted transferees will own at least 20% of our outstanding shares of common stock entitled to vote thereon (excluding any private placement securities which may be owned by or deemed to be beneficially owned by our initial stockholders or any securities issued upon conversion of working capital loans). Each public stockholder may elect to redeem their public shares without voting and, if they do vote, irrespective of whether they vote for or against the proposed transaction. In addition, our initial stockholders have entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares, private placement shares and any public shares held by them in connection with the completion of a business combination.
Our amended and restated certificate of incorporation will provide that 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 (so that we do not then become subject to the SEC’s “penny stock” rules). Redemptions of our public shares may also be subject to a higher net tangible asset test or cash requirement pursuant to an agreement relating to our initial business combination. For example, the proposed business combination may require: (1) cash consideration to be paid to the target or its owners; (2) cash to be transferred to the target for working capital or other general corporate purposes; or (3) the retention of cash to satisfy other conditions in accordance with the terms of the proposed business combination. In the event the aggregate cash consideration we would be required to pay for all shares of Class A common stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of cash available to us, we will not complete the business combination or redeem any shares, and all shares of Class A common stock submitted for redemption will be returned to the holders thereof.
LIMITATION ON REDEMPTION UPON COMPLETION OF OUR INITIAL BUSINESS COMBINATION IF WE SEEK STOCKHOLDER APPROVAL
Notwithstanding the foregoing, if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation will provide that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to Excess Shares. We believe this restriction will discourage stockholders from accumulating large blocks of shares, and subsequent attempts by such holders to use their ability to exercise their redemption rights against a proposed business combination as a means to force us or our founders or their affiliates to purchase their shares at a significant premium to the then-current market price
or on other undesirable terms. Absent this provision, a public stockholder holding more than an aggregate of 15% of the shares sold in this offering could threaten to exercise its redemption rights if such holder’s shares are not purchased by us or our founders or their affiliates at a premium to the then-current market price or on other undesirable terms. By limiting our stockholders’ ability to redeem no more than 15% of the shares sold in this offering, we believe we will limit the ability of a small group of stockholders to unreasonably attempt to block our ability to complete our initial business combination, particularly in connection with a business combination with a target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. However, we would not be restricting our stockholders’ ability to vote all of their shares (including Excess Shares) for or against our initial business combination.
TENDERING STOCK CERTIFICATES IN CONNECTION WITH A TENDER OFFER OR REDEMPTION RIGHTS
We may require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to either tender their certificates to our transfer agent prior to the date set forth in the tender offer documents or proxy materials mailed to such holders, or up to two business days prior to the vote on the proposal to approve the business combination in the event we distribute proxy materials or to deliver their shares to the transfer agent electronically using The Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, rather than simply voting against the initial business combination at the holder’s option. The tender offer or proxy materials, as applicable, that we will furnish to holders of our public shares in connection with our initial business combination will indicate whether we are requiring public stockholders to satisfy such delivery requirements. Accordingly, a public stockholder would have from the time we send out our tender offer materials until the close of the tender offer period, or up to two business days prior to the vote on the business combination if we distribute proxy materials, as applicable, to tender its shares if it wishes to seek to exercise its redemption rights. Pursuant to the tender offer rules, the tender offer period will be not less than 20 business days and, in the case of a stockholder vote, a final proxy statement would be mailed to public stockholders at least 10 days prior to the stockholder vote. However, we expect that a draft proxy statement would be made available to such stockholders well in advance of such time, providing additional notice of redemption if we conduct redemptions in conjunction with a proxy solicitation. Given the relatively short exercise period, it is advisable for stockholders to use electronic delivery of their public shares.
There is a nominal cost associated with the above-referenced tendering process and the act of certificating the shares or delivering them through The Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System. The transfer agent will typically charge the tendering broker $80.00 and it would be up to the broker whether or not to pass this cost on to the redeeming holder. However, this fee would be incurred regardless of whether or not we require holders seeking to exercise redemption rights to tender their shares. The need to deliver shares is a requirement of exercising redemption rights regardless of the timing of when such delivery must be effectuated.
The foregoing is different from the procedures used by many blank check companies. In order to perfect redemption rights in connection with their business combinations, many blank check companies would distribute proxy materials for the stockholders’ vote on an initial business combination, and a holder could simply vote against a proposed business combination and check a box on the proxy card indicating such holder was seeking to exercise his or her redemption rights. After the business combination was approved, the company would contact such stockholder to arrange for him or her to deliver his or her certificate to verify ownership. As a result, the stockholder then had an “option window” after the completion of the business combination during which he or she could monitor the price of the company’s stock in the market. If the price rose above the redemption price, he or she could sell his or her shares in the open market before actually delivering his or her shares to the company for cancellation. As a result, the redemption rights, to which stockholders were aware they needed to commit before the stockholder meeting, would become “option” rights surviving past the completion of the business combination until the redeeming holder delivered its certificate. The requirement for physical or electronic delivery prior to the meeting ensures that a redeeming holder’s election to redeem is irrevocable once the business combination is approved.
Any request to redeem such shares, once made, may be withdrawn at any time up to the date set forth in the tender offer materials or the date of the stockholder meeting set forth in our proxy materials, as applicable.
Furthermore, if a holder of a public share delivered its certificate in connection with an election of redemption rights and subsequently decides prior to the applicable date not to elect to exercise such rights, such holder may simply request that the transfer agent return the certificate (physically or electronically). It is anticipated that the funds to be distributed to holders of our public shares electing to redeem their shares will be distributed promptly after the completion of our initial business combination.
If our initial business combination is not approved or completed for any reason, then our public stockholders who elected to exercise their redemption rights would not be entitled to redeem their shares for the applicable pro rata share of the trust account. In such case, we will promptly return any certificates delivered by public holders who elected to redeem their shares.
If our initial proposed business combination is not completed, we may continue to try to complete a business combination with a different target until 24 months from the closing of this offering.
REDEMPTION OF PUBLIC SHARES AND LIQUIDATION IF NO INITIAL BUSINESS COMBINATION
Our amended and restated certificate of incorporation provides that we will have only 24 months from the closing of this offering to complete our initial business combination. If we are unable to complete our initial business combination within such 24-month period, we 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, 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 us to pay our franchise and income taxes (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 liquidating distributions, if any), subject to applicable law; and (3) as promptly as reasonably possible following such redemption, 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. There will be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless if we fail to complete our initial business combination within the 24-month time period.
Our initial stockholders have entered into a letter agreement with us, pursuant to which they have waived their rights to liquidating distributions from the trust account with respect to their founder shares and private placement shares if we fail to complete our initial business combination within 24 months from the closing of this offering. However, if our initial stockholders acquire public shares after this offering, they will be entitled to liquidating distributions from the trust account with respect to such public shares if we fail to complete our initial business combination within the allotted 24-month time period.
Our initial stockholders have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering, unless we provide our public stockholders with the opportunity to redeem their shares of Class A common stock upon approval of any such amendment 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 us to pay our franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares. However, we may not redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that we do not then become subject to the SEC’s “penny stock” rules).
We expect that all costs and expenses associated with implementing our plan of dissolution, as well as payments to any creditors, will be funded from amounts remaining out of the $1,025,000 of proceeds held outside the trust account, although we cannot assure you that there will be sufficient funds for such purpose. However, if those funds are not sufficient to cover the costs and expenses associated with implementing our plan of dissolution, to the extent that there is any interest accrued in the trust account not required to
pay taxes we may request the trustee to release to us an additional amount of up to $100,000 of such accrued interest to pay those costs and expenses.
If we were to expend all of the net proceeds of this offering and the sale of the private placement securities, other than the proceeds deposited in the trust account, and without taking into account interest, if any, earned on the trust account, the per share redemption amount received by stockholders upon our dissolution would be approximately $10.00. The proceeds deposited in the trust account could, however, become subject to the claims of our creditors which would have higher priority than the claims of our public stockholders. We cannot assure you that the actual per share redemption amount received by stockholders will not be substantially less than $10.00. See “Risk Factors — If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per share redemption amount received by stockholders may be less than $10.00 per share” and other risk factors described above. Under Section 281(b) of the DGCL, our plan of dissolution must provide for all claims against us to be paid in full or make provision for payments to be made in full, as applicable, if there are sufficient assets. These claims must be paid or provided for before we make any distribution of our remaining assets to our stockholders. While we intend to pay such amounts, if any, we cannot assure you that we will have funds sufficient to pay or provide for all creditors’ claims.
Although we will seek to have all vendors, service providers, prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders, there is no guarantee that they will execute such agreements or even if they execute such agreements that they would be prevented from bringing claims against the trust account including but not limited to fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain an advantage with respect to a claim against our assets, including the funds held in the trust account. If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account, our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such third party’s engagement would be significantly more beneficial to us than any alternative. The underwriters of this offering will not execute agreements with us waiving such claims to the monies held in the trust account.
Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where we are unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason. 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 third party for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amount of funds in the trust account to below (1) $10.00 per public share or (2) such lesser amount per public share held in the trust account as of the date of the liquidation of the trust account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay our franchise and income taxes, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the trust account and except as to any claims under our indemnity of the underwriters of this offering against certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, our sponsor will not be responsible to the extent of any liability for such third party claims. We have not independently verified whether our sponsor has sufficient funds to satisfy its indemnity obligations and believe that our sponsor’s only assets are securities of our company and, therefore, our sponsor may not be able to satisfy those obligations. We have not asked our sponsor to reserve for such obligations. None of our other officers will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
In the event that the proceeds in the trust account are reduced below: (1) $10.00 per public share; or (2) such lesser amount per public share held in the trust account as of the date of the liquidation of the
trust account, due to reductions in the value of the trust assets, in each case net of the amount of interest which may be withdrawn to pay our franchise and income taxes, and our sponsor asserts that it is unable to satisfy its indemnification obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action against our sponsor to enforce its indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf against our sponsor to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment and subject to their fiduciary duties may choose not to do so in certain instances. Accordingly, we cannot assure you that due to claims of creditors the actual value of the per share redemption price will not be substantially less than $10.00 per share. See “Risk Factors — If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per share redemption amount received by stockholders may be less than $10.00 per share” and other risk factors described above.
We will seek to reduce the possibility that our sponsor will have to indemnify the trust account due to claims of creditors by endeavoring to have all vendors, service providers, prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to monies held in the trust account. Our sponsor will also not be liable as to any claims under our indemnity of the underwriters of this offering against certain liabilities, including liabilities under the Securities Act. We will have access to up to $2,025,000 from the proceeds of this offering and the sale of the private placement securities, with which to pay any such potential claims (including costs and expenses incurred in connection with our liquidation, currently estimated to be no more than approximately $100,000). In the event that we liquidate and it is subsequently determined that the reserve for claims and liabilities is insufficient, stockholders who received funds from our trust account could be liable for claims made by creditors. In the event that our offering expenses exceed our estimate of $1,000,000, we may fund such excess with funds from the funds not to be held in the trust account. In such case, the amount of funds we intend to be held outside the trust account would decrease by a corresponding amount. Conversely, in the event that the offering expenses are less than our estimate of $1,000,000, the amount of funds we intend to be held outside the trust account would increase by a corresponding amount.
Under the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete our initial business combination within 24 months from the closing of this offering may be considered a liquidating distribution under Delaware law. If the corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution.
Furthermore, if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete our initial business combination within 24 months from the closing of this offering, is not considered a liquidating distribution under Delaware law and such redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidating distribution. If we are unable to complete our initial business combination within 24 months from the closing of this offering, we will: (1) cease all operations except for the purpose of winding up; (2) as promptly as reasonably possible but not more than 10 business days thereafter, 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 us to pay our franchise and income taxes (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 liquidating distributions, if any), subject to applicable law; and (3) as promptly as reasonably possible following such redemption, 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. Accordingly, it is our intention to redeem our public shares as soon as reasonably possible following our 24th month and, therefore, we do not intend to comply with those procedures. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend well beyond the third anniversary of such date.
Because we will not be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within the subsequent ten years. However, because we are a blank check company, rather than an operating company, and our operations will be limited to searching for prospective target businesses with which to conduct an initial business combination, the only likely claims to arise would be from our vendors (such as lawyers, investment bankers, etc.) or prospective target businesses. As described above, pursuant to the obligation contained in our underwriting agreement, we will seek to have all vendors, service providers, prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account.
As a result of this obligation, the claims that could be made against us are significantly limited and the likelihood that any claim that would result in any liability extending to the trust account is remote. Further, our sponsor may be liable only to the extent necessary to ensure that the amounts in the trust account are not reduced below: (1) $10.00 per public share; or (2) such lesser amount per public share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets, in each case net of the amount of interest withdrawn to pay our franchise and income taxes and will not be liable as to any claims under our indemnity of the underwriters of this offering against certain liabilities, including liabilities under the Securities Act. In the event that an executed waiver is deemed to be unenforceable against a third party, our sponsor will not be responsible to the extent of any liability for such third-party claims.
If 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, we cannot assure you we will be able to return $10.00 per share to our public stockholders. Additionally, if we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that 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 some or all amounts received by our stockholders. Furthermore, our board may be viewed as having breached its fiduciary duty to our creditors and/or may have acted in bad faith, and thereby exposing itself and our company to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons. See “Risk Factors — If, after we distribute 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, a bankruptcy court may seek to recover such proceeds, and the members of our board of directors may be viewed as having breached their fiduciary duties to our creditors, thereby exposing the members of our board of directors and us to claims of punitive damages.”
Our public stockholders will be entitled to receive funds from the trust account only in the event of the redemption of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering or if they redeem their respective shares for cash upon the completion of the initial business combination. In no other circumstances will a stockholder have any right or interest of any kind to or in the trust account. In the event we seek stockholder approval in connection with our initial business combination, a stockholder’s voting in connection with our initial business combination alone will not result in a stockholder’s redeeming its shares to us for an applicable pro rata share of the trust account. Such stockholder must have also exercised its redemption rights described above.
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
Our amended and restated certificate of incorporation will contain certain requirements and restrictions relating to this offering that will apply to us until the consummation of our initial business combination. If we seek to amend any provisions of our amended and restated certificate of incorporation relating to stockholders’ rights or pre-business combination activity, we will provide public stockholders with the opportunity to redeem their public shares in connection with any such vote. Specifically, our amended and restated certificate of incorporation will provide, among other things, that:
•
prior to the consummation of our initial business combination, we shall either: (1) seek stockholder approval of our initial business combination at a meeting called for such purpose at which stockholders may seek to redeem their shares, regardless of whether they vote for or against the proposed business combination, into their pro rata share of the aggregate amount then on deposit in the trust account, including interest (which interest shall be net of taxes payable); or (2) provide our public stockholders with the opportunity to tender their shares to us by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the trust account, including interest (which interest shall be net of taxes payable), in each case subject to the limitations described herein;
•
we will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 upon such consummation and, solely if we seek stockholder approval, a majority of the outstanding shares of common stock voted are voted in favor of the business combination at a duly held stockholders meeting;
•
we will consummate our initial business combination only if a majority of our independent directors approve such transaction;
•
if our initial business combination is not consummated within 24 months from the closing of this offering, then our existence will terminate and we will distribute all amounts in the trust account; and
•
prior to our initial business combination, we may not issue additional shares of capital stock that would entitle the holders thereof to (1) receive funds from the trust account or (2) vote on any initial business combination.
These provisions cannot be amended without the approval of holders of 65% of our common stock. In the event we seek stockholder approval in connection with our initial business combination, our amended and restated certificate of incorporation will provide that we may consummate our initial business combination only if approved by a majority of the shares of common stock voted by our stockholders at a duly held stockholders meeting.
COMPARISON OF REDEMPTION OR PURCHASE PRICES IN CONNECTION WITH OUR INITIAL BUSINESS COMBINATION AND IF WE FAIL TO COMPLETE OUR INITIAL BUSINESS COMBINATION
The following table compares the redemptions and other permitted purchases of public shares that may take place in connection with the completion of our initial business combination and if we are unable to complete our initial business combination within 24 months from the closing of this offering.
| |
|
|
|
Redemptions in Connection with
our Initial Business Combination
|
|
|
Other Permitted Purchases of
Public Shares by our Affiliates
|
|
|
Redemptions if we fail to
Complete an Initial Business
Combination
|
|
| |
Calculation of redemption price
|
|
|
Redemptions at the time of our initial business combination may be made pursuant to a tender offer or in connection with a stockholder vote. The redemption price will be
|
|
|
If we seek stockholder approval of our initial business combination, our founders, directors, officers or any of their affiliates may purchase shares in privately negotiated transactions or
|
|
|
If we are unable to complete our initial business combination within 24 months from the closing of this offering, we will redeem all public shares at a per share price, payable in
|
|
| |
|
|
|
Redemptions in Connection with
our Initial Business Combination
|
|
|
Other Permitted Purchases of
Public Shares by our Affiliates
|
|
|
Redemptions if we fail to
Complete an Initial Business
Combination
|
|
| |
|
|
|
the same whether we conduct redemptions pursuant to a tender offer or in connection with a stockholder vote. In either case, our public stockholders may redeem their public shares for cash equal to the aggregate amount then on deposit in the trust account as of two business days prior to the consummation of the initial business combination (which is initially anticipated to be $10.00 per share), including interest earned on the funds held in the trust account and not previously released to us to pay our franchise and income taxes, divided by the number of then outstanding public shares, subject to the limitation that no redemptions will take place if all of the redemptions would cause our net tangible assets to be less than $5,000,001 and any limitations (including but not limited to cash requirements) agreed to in connection with the negotiation of terms of a proposed business combination.
|
|
|
in the open market either prior to or following the completion of our initial business combination. Such purchases will only be made to the extent such purchases are able to be made in compliance with Rule 10b-18, which is a safe harbor from liability for manipulation under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. None of the funds in the trust account will be used to purchase shares in such transactions.
|
|
|
cash, equal to the aggregate amount then on deposit in the trust account (which is initially anticipated to be $10.00 per share), including interest earned on the funds held in the trust account and not previously released to us to pay our franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares.
|
|
| |
Impact to remaining stockholders
|
|
|
The redemptions in connection with our initial business combination will reduce the book value per share for our remaining stockholders, who will bear the burden of the Marketing Fee and interest withdrawn in order to pay taxes (to the extent not paid from
|
|
|
If the permitted purchases described above are made, there will be no impact to our remaining stockholders because the purchase price would not be paid by us.
|
|
|
The redemption of our public shares if we fail to complete our initial business combination will reduce the book value per share for the shares held by our initial stockholders, who will be our only remaining stockholders after such redemptions.
|
|
| |
|
|
|
Redemptions in Connection with
our Initial Business Combination
|
|
|
Other Permitted Purchases of
Public Shares by our Affiliates
|
|
|
Redemptions if we fail to
Complete an Initial Business
Combination
|
|
| |
|
|
|
amounts accrued as interest on the funds held in the trust account).
|
|
|
|
|
|
|
|
Comparison of This Offering to Those of Blank Check Companies Subject to Rule 419
The following table compares the terms of this offering to the terms of an offering by a blank check company subject to the provisions of Rule 419. This comparison assumes that the gross proceeds, underwriting commissions and underwriting expenses of our offering would be identical to those of an offering undertaken by a company subject to Rule 419, and that the underwriters will not exercise their over-allotment option. None of the provisions of Rule 419 apply to our offering.
| |
|
|
|
Terms of Our Offering
|
|
|
Terms Under a Rule 419 Offering
|
|
| |
Escrow of offering proceeds
|
|
|
Nasdaq listing rules provide that at least 90% of the gross proceeds from this offering and the sale of the private placement units be deposited in a trust account. $250,000,000 of the net proceeds of this offering and the sale of the private placement units will be deposited into a U.S.-based trust account with Continental Stock Transfer & Trust Company acting as trustee.
|
|
|
Approximately $212,625,000 of the offering proceeds, representing the gross proceeds of this offering less allowable underwriting commissions, expenses and company deductions under Rule 419, would be required to be deposited into either an escrow account with an insured depositary institution or in a separate bank account established by a broker-dealer in which the broker-dealer acts as trustee for persons having the beneficial interests in the account.
|
|
| |
Investment of net proceeds
|
|
|
$250,000,000 of the net offering proceeds and the sale of the private placement units held in trust will be invested only in U.S. government treasury bills with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act.
|
|
|
Proceeds could be invested only in specified securities such as a money market fund meeting conditions of the Investment Company Act or in securities that are direct obligations of, or obligations guaranteed as to principal or interest by, the United States.
|
|
| |
Receipt of interest on escrowed funds
|
|
|
Interest on proceeds from the trust account to be paid to stockholders is reduced by: (1) any taxes paid or payable; and (2) in the event of our liquidation for failure to complete our initial business combination within the allotted time, up to $100,000 of net interest that may be released to us should we have no or insufficient working capital to fund the costs and expenses of our dissolution and liquidation.
|
|
|
Interest on funds in escrow account would be held for the sole benefit of investors, unless and only after the funds held in escrow were released to us in connection with our completion of a business combination.
|
|
| |
|
|
|
Terms of Our Offering
|
|
|
Terms Under a Rule 419 Offering
|
|
| |
Limitation on fair value or net assets of target business
|
|
|
Nasdaq listing rules require that our initial business combination must be with one or more target businesses that together have an aggregate fair market value equal to at least 80% of the value of the trust account (excluding any deferred underwriters fees, if any, and taxes payable on the income earned on the trust account) at the time of our signing a definitive agreement in connection with our initial business combination.
|
|
|
The fair value or net assets of a target business must represent at least 80% of the maximum offering proceeds.
|
|
| |
Trading of securities issued
|
|
|
The units will begin trading on or promptly after the date of this prospectus. We expect that the Class A common stock and warrants constituting the units will begin separate trading on the 52nd day following the date of this prospectus unless Cowen and Company, LLC and Craig-Hallum Capital Group LLC inform us of their decision to allow earlier separate trading, subject to our having filed the Current Report on Form 8-K described below and having issued a press release announcing when such separate trading will begin. We will file the Current Report on Form 8-K promptly after the closing of this offering, which closing is anticipated to take place three business days from the date of this prospectus. If the underwriters’ over-allotment option is exercised following the initial filing of such Current Report on Form 8-K, a second or amended Current Report on Form 8-K will be filed to provide updated financial information to reflect the exercise of the underwriters’ over-allotment option.
|
|
|
No trading of the units or the underlying common stock and warrants would be permitted until the completion of a business combination. During this period, the securities would be held in the escrow or trust account.
|
|
| |
Exercise of the warrants
|
|
|
The warrants cannot be exercised until the later of 30 days after the completion of our initial business combination or 12 months from the closing of this offering.
|
|
|
The warrants could be exercised prior to the completion of a business combination, but securities received and cash paid in connection with the exercise would be deposited in the escrow or trust account.
|
|
| |
|
|
|
Terms of Our Offering
|
|
|
Terms Under a Rule 419 Offering
|
|
| |
Election to remain an investor
|
|
|
We will provide our public stockholders with the opportunity to redeem their public shares for cash equal to their pro rata share of the aggregate amount then on deposit in the trust account as of two business days prior to the consummation of our initial business combination, including interest, which interest shall be net of taxes payable, upon the completion of our initial business combination, subject to the limitations described herein. We may not be required by applicable law or stock exchange rules to hold a stockholder vote. If we are not required by applicable law or stock exchange rules and do not otherwise decide to hold a stockholder vote, we will, pursuant to our amended and restated certificate of incorporation, conduct the redemptions pursuant to the tender offer rules of the SEC and file tender offer documents with the SEC which will contain substantially the same financial and other information about the initial business combination and the redemption rights as is required under the SEC’s proxy rules. If, however, we hold a stockholder vote, we will, like many blank check companies, offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. Pursuant to the tender offer rules, the tender offer period will be not less than 20 business days and, in the case of a stockholder vote, a final proxy statement would be mailed to public stockholders at least 10 days prior to the stockholder vote. However, we expect that a draft proxy statement would be made available to such stockholders well in advance of
|
|
|
A prospectus containing information pertaining to the business combination required by the SEC would be sent to each investor. Each investor would be given the opportunity to notify the company in writing, within a period of no less than 20 business days and no more than 45 business days from the effective date of a post-effective amendment to the company’s registration statement, to decide if he, she or it elects to remain a stockholder of the company or require the return of his, her or its investment. If the company has not received the notification by the end of the 45th business day, funds and interest or dividends, if any, held in the trust or escrow account are automatically returned to the stockholder. Unless a sufficient number of investors elect to remain investors, all funds on deposit in the escrow account must be returned to all of the investors and none of the securities are issued.
|
|
| |
|
|
|
Terms of Our Offering
|
|
|
Terms Under a Rule 419 Offering
|
|
| |
|
|
|
such time, providing additional notice of redemption if we conduct redemptions in conjunction with a proxy solicitation. If we seek stockholder approval, we will complete our initial business combination only if a majority of the outstanding shares of common stock voted are voted in favor of the business combination. A quorum for such meeting will consist of the holders present in person or by proxy of shares of outstanding capital stock of the company representing a majority of the voting power of all outstanding shares of capital stock of the company entitled to vote at such meeting.
Additionally, each public stockholder may elect to redeem its public shares without voting and, if they do vote, irrespective of whether they vote for or against the proposed transaction.
|
|
|
|
|
| |
Business combination deadline
|
|
|
If we are unable to complete an initial business combination within 24 months from the closing of this offering, we will: (1) cease all operations except for the purpose of winding up; (2) as promptly as reasonably possible but not more than 10 business days thereafter, redeem 100% of 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 our franchise and income taxes (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
|
|
|
If an acquisition has not been completed within 18 months after the effective date of the company’s registration statement, funds held in the trust or escrow account are returned to investors.
|
|
| |
|
|
|
Terms of Our Offering
|
|
|
Terms Under a Rule 419 Offering
|
|
| |
|
|
|
to receive further liquidating distributions, if any), subject to applicable law; and (3) as promptly as reasonably possible following such redemption, 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.
|
|
|
|
|
| |
Release of funds
|
|
|
Except with respect to interest earned on the funds held in the trust account that may be released to us to pay our franchise and income taxes, the funds held in the trust account will not be released from the trust account until the earliest of: (1) the completion of our initial business combination; (2) the redemption of any public shares properly tendered in connection with a stockholder vote to amend our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering; and (3) the redemption of all of our public shares if we are unable to complete our initial business combination within 24 months from the closing of this offering, subject to applicable law.
|
|
|
The proceeds held in the escrow account are not released until the earlier of the completion of a business combination or the failure to effect a business combination within the allotted time.
|
|
| |
|
|
|
Terms of Our Offering
|
|
|
Terms Under a Rule 419 Offering
|
|
| |
Limitation on redemption rights of stockholders holding more than 15% of the shares sold in this offering if we hold a stockholder vote
|
|
|
If we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation will provide that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect Excess Shares (more than an aggregate of 15% of the shares sold in this offering). Our public stockholders’ inability to redeem Excess Shares will reduce their influence over our ability to complete our initial business combination and they could suffer a material loss on their investment in us if they sell Excess Shares in open market transactions.
|
|
|
Most blank check companies provide no restrictions on the ability of stockholders to redeem shares based on the number of shares held by such stockholders in connection with an initial business combination.
|
|
| |
Tendering stock certificates in connection with a tender offer or redemption rights
|
|
|
We may require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to either tender their certificates to our transfer agent prior to the date set forth in the tender offer documents or proxy materials mailed to such holders or up to two business days prior to the vote on the proposal to approve the business combination in the event we distribute proxy materials, or to deliver their shares to the transfer agent electronically using The Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s option. The tender offer or proxy materials, as applicable, that we will furnish to holders of
|
|
|
In order to perfect redemption rights in connection with their business combinations, holders could vote against a proposed business combination and check a box on the proxy card indicating such holders were seeking to exercise their redemption rights. After the business combination was approved, the company would contact such stockholders to arrange for them to deliver their certificate to verify ownership.
|
|
| |
|
|
|
Terms of Our Offering
|
|
|
Terms Under a Rule 419 Offering
|
|
| |
|
|
|
our public shares in connection with our initial business combination will indicate whether we are requiring public stockholders to satisfy such delivery requirements. Accordingly, a public stockholder would have from the time we send out our tender offer materials until the close of the tender offer period, or up to two business days prior to the vote on the business combination if we distribute proxy materials, as applicable, to tender its shares if it wishes to seek to exercise its redemption rights.
|
|
|
|
|
COMPETITION
In identifying, evaluating and selecting a target business for our initial business combination, we may encounter intense competition from other entities having a business objective similar to ours, including other blank check companies, private equity groups and leveraged buyout funds, public companies and operating businesses seeking strategic acquisitions. Many of these entities are well established and have extensive experience identifying and effecting business combinations directly or through affiliates. Moreover, many of these competitors possess greater financial, technical, human and other resources than us. Our ability to conduct an initial business combination with larger target businesses will be limited by our available financial resources. This inherent limitation gives others an advantage in pursuing a business combination with a target business. Furthermore, our obligation to pay cash in connection with our public stockholders who exercise their redemption rights may reduce the resources available to us for our initial business combination and our outstanding warrants, and the future dilution they potentially represent, may not be viewed favorably by certain target businesses. Either of these factors may place us at a competitive disadvantage in successfully negotiating an initial business combination.
CONFLICTS OF INTEREST
Certain of our directors and officers and affiliates of our founders manage several investment vehicles. These entities may compete with us for business combination opportunities in the same industries and sectors as we may target for our initial business combination. If these entities decide to pursue any such opportunity, we may be precluded from procuring such opportunities.
In addition, investment ideas generated within by our founders and other persons who may make decisions for the company, may be suitable for both us and for current or future entities managed by our directors, officers or affiliates of our founders and may be directed to such investment vehicle rather than to us. As employees or affiliates of other companies or funds, certain members of the management team are and in the future will be involved in the formation of and offerings by these companies or funds as well as the identification, acquisition and management of investments by such companies or funds. The letter agreements entered into with our officers will not restrict them from undertaking any such activities. As a result, conflicts of interest may arise between our officers’ fiduciary and contractual obligations to these companies or funds and our officers’ obligations to us. None of the members of our management team have any obligation to present us with any opportunity for a potential business combination of which they become aware. Our management team, in their capacities as directors, officers or employees of our founders their affiliates in their other endeavors or in other companies or funds, may choose to present potential business combinations to other entities or funds described above, current or future investment vehicles of our founders their affiliates, or third parties, before they present such opportunities to us, subject to applicable
fiduciary duties. See the section of this prospectus entitled “Risk Factors — Certain of our officers and directors are now, and all of them may in the future become, affiliated with entities engaged in business activities similar to those intended to be conducted by us and, accordingly, may have conflicts of interest in determining to which entity a particular business opportunity should be presented.”
As more fully discussed in “Management — Conflicts of Interest,” each of our officers and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations to one or more other entities pursuant to which such officer or director is or will be required to present a business combination opportunity to such entity. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for an entity to which he or she has then-current fiduciary or contractual obligations, he or she will honor these obligations to present such business combination opportunity to such entity, subject to his or her fiduciary duties to us under Delaware law. We do not believe, however, that the fiduciary duties or contractual obligations of our officers or directors will materially affect our ability to complete our initial business combination.
FACILITIES
We currently maintain our executive offices at 14 Elm Place, Suite 206, Rye, New York 10580. The cost for this space and any successor space is included in the $20,000 per month, for up to 24 months, fee that we will pay to our sponsor for office space, utilities, general office and secretarial support, and administrative and support services. We consider our current office space adequate for our current operations.
EMPLOYEES
We currently have two officers and do not intend to have any full-time employees prior to the completion of our initial business combination. Members of our management team and advisors are not obligated to devote any specific number of hours to our matters but they intend to devote as much of their time as they deem necessary to our affairs until we have completed our initial business combination. The amount of time that any such person will devote in any time period will vary based on whether a target business has been identified for our initial business combination and the current stage of the business combination process.
PERIODIC REPORTING AND FINANCIAL INFORMATION
We will register our public units, Class A common stock and warrants under the Exchange Act and have reporting obligations, including the requirement that we file annual, quarterly and current reports with the SEC. In accordance with the requirements of the Exchange Act, our annual reports will contain financial statements audited and reported on by our independent registered public accounting firm.
We will provide stockholders with audited financial statements of the prospective target business as part of the tender offer materials or proxy solicitation materials sent to stockholders to assist them in assessing the target business. These financial statements may be required to be prepared in accordance with, or be reconciled to, GAAP or IFRS, depending on the circumstances and the historical financial statements may be required to be audited in accordance with the PCAOB. These financial statement requirements may limit the pool of potential target businesses with which we conduct an initial business combination because some targets may be unable to provide such financial statements in time for us to disclose such financial statements in accordance with federal proxy rules and complete our initial business combination within the prescribed time frame. While this may limit the pool of potential business combination candidates, we do not believe that this limitation will be material.
We will be required to evaluate our internal control procedures for the fiscal year ending December 31, 2021 as required by the Sarbanes-Oxley Act. Only in the event we are deemed to be a large accelerated filer or an accelerated filer, and no longer an emerging growth company, will we be required to have our internal control procedures audited. A target business may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such business combination.
Prior to the date of this prospectus, we will file a Registration Statement on Form 8-A with the SEC to voluntarily register our securities under Section 12 of the Exchange Act. As a result, we will be subject to
the rules and regulations promulgated under the Exchange Act. We have no current intention of filing a Form 15 to suspend our reporting or other obligations under the Exchange Act prior or subsequent to the consummation of our initial business combination.
We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile.
In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period.
We 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 this offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the end of the prior fiscal year’s second quarter, and (2) the date on which we have issued more than $1.00 billion in non-convertible debt securities during the prior three-year period.
Additionally, we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our common stock held by non-affiliates exceeds $250 million as of the prior June 30, or (2) our annual revenues exceeded $100 million during such completed fiscal year and the market value of our common stock held by non-affiliates exceeds $700 million as of the prior June 30.
LEGAL PROCEEDINGS
There is no material litigation, arbitration or governmental proceeding currently pending against us or any members of our management team in their capacity as such.
MANAGEMENT
DIRECTORS, DIRECTOR NOMINEES, EXECUTIVE OFFICERS AND EXECUTIVE OFFICER NOMINEES
Our directors, director nominees, executive officers and executive officer nominees are as follows:
|
Name
|
|
|
Age
|
|
|
Title
|
|
|
Adam Rothstein
|
|
|
49
|
|
|
Executive Chairman and Director
|
|
|
Emiliano Calemzuk
|
|
|
47
|
|
|
Chief Executive Officer and Director
|
|
|
Michael Del Nin
|
|
|
49
|
|
|
Chief Financial Officer and Chief Operating Officer nominee
|
|
|
Linda Yaccarino
|
|
|
58
|
|
|
Director nominee
|
|
|
Kelli Turner
|
|
|
50
|
|
|
Director nominee
|
|
|
David Bank
|
|
|
51
|
|
|
Director nominee
|
|
|
Scott Flanders
|
|
|
64
|
|
|
Director nominee
|
|
|
Jon Jashni
|
|
|
57
|
|
|
Director nominee
|
|
Adam Rothstein serves as our Executive Chairman and board member. Mr. Rothstein is a Co-Founder and General Partner of Disruptive Technology Partners, an Israeli technology-focused early-stage investment fund, and Disruptive Growth, a collection of late-stage investment vehicles focused on Israeli technology, which he co-founded in 2013 and 2014 respectively. Since 2014, Mr. Rothstein has been a Venture Partner in Subversive Capital, and the Managing Member of 1007 Mountain Drive Partners, LLC, which are both consulting and investment vehicles. Mr. Rothstein is also a sponsor and director of Roth CH Acquisition I Co. (NASDAQ: ROCH), a special purpose acquisition company that has entered into an agreement and plan of merger with PureCycle Technologies LLC pursuant to which Roth CH Acquisition I Co. will acquire PureCycle Technologies LLC, Roth CH Acquisition II Co. (NASDAQ: ROCCU), which is a special purpose acquisition company, and Subversive Capital Acquisition Corp. (NEO: SVC.A.U) (OTCQX: SBVCF), a special purpose acquisition company that has just announced the acquisition of Caliva, Left Coast Ventures, and Sisu. Mr. Rothstein has over 20 years of investment experience, and currently sits on the boards of directors of several early- and mid-stage technology and media companies both in the US and in Israel and is on the Advisory Board for the Leeds School of Business at the University of Colorado, Boulder. Mr. Rothstein graduated summa cum laude with a Bachelor of Science in Economics from the Wharton School of Business at the University of Pennsylvania and has a Master of Philosophy (MPhil) in Finance from the University of Cambridge.
Emiliano Calemzuk serves as our Chief Executive Officer and a board member. Mr. Calemzuk is a media executive and entrepreneur with 20 years of experience in the international media and management space. He currently serves as the Lead Independent Director and Chairman of the Nominating and Corporate Governance at MercadoLibre, Inc. (Nasdaq: MELI), an e-commerce and payments platform in Latin America. Mr. Calemzuk was recently Co-Founder and CEO of RAZE, a Los Angeles-based media venture which produces traditional and social content geared toward a Hispanic and Latin American audience in the United States. RAZE was acquired by WarnerMedia’s Turner Latin America in July 2020. In 2015 and 2016 Mr. Calemzuk partnered with Time Inc., publisher of Time, Sports Illustrated, People, and other major magazine titles to assist with Time Inc.’s entry into digital video. In 2013 and 2014 Mr. Calemzuk joined Jeff Sagansky’s and Harry Sloan’s $400 million special purpose acquisition company, Silver Eagle Acquisition Company, as target company Chief Executive Officer designate. Mr. Calemzuk had a 14-year career at 21st Century Fox / News Corp in the C-suite. He served as Chief Executive Officer of Shine Group Americas, a unit of 21st Century Fox, from 2010 to 2012. In this capacity Mr. Calemzuk oversaw scripted and non-scripted television series. From 2007 to 2010, Mr. Calemzuk served as President of Fox Television Studios. From 2002 to 2007 Mr. Calemzuk was based in Rome, Italy, as President of FOX International Channels Europe where he managed the operation of the FOX Italian TV group. In addition, Mr. Calemzuk supervised the FOX operation in Spain, France, Germany, Turkey, and Eastern Europe. Before moving to Rome, Mr. Calemzuk was Vice President and Deputy Managing Director of FOX Latin American Channels. In 2000 Mr. Calemzuk held the post of General Manager of Fox Kids Latin America. Mr. Calemzuk was
born in Mar del Plata, Argentina, and is a cum laude graduate of the Wharton School of Business at the University of Pennsylvania.
Michael Del Nin has agreed to serve as our Chief Financial Officer and Chief Operating Officer commencing prior to the closing of this offering. Mr. Del Nin was the Co-Chief Executive Officer of Central European Media Enterprises Ltd. (Nasdaq: CETV), one of Europe’s leading television broadcasters, from September 2013 until its sale in October 2020, and was a member of its Board of Directors from October 2009 until September 2013. Mr. Del Nin previously was the Senior Vice President of International and Corporate Strategy at Time Warner Inc. from 2008 until 2013, in which capacity he helped drive Time Warner Inc.’s global strategy and business development initiatives, with a particular focus on international operations and investments. From 2006 to 2008, Mr. Del Nin was the Senior Vice President responsible for Mergers and Acquisitions at Time Warner Inc. Mr. Del Nin’s prior experience includes roles at New Line Cinema, as Senior Vice President, Business Development, and as an investment banker at Salomon Smith Barney focused on the media industry. Mr. Del Nin holds an undergraduate business degree from Bocconi University and a law degree from the University of New South Wales.
Linda Yaccarino has agreed to serve as a board member commencing upon the effectiveness of the registration statement of which this prospectus forms a part. As Chairman of Global Advertising and Partnerships at NBCUniversal, Ms. Yaccarino is responsible for managing over $10 billion in revenue annually and stewarding the company’s industry-leading portfolio of linear networks, digital platforms, distribution partnerships, and client relationships. At NBCUniversal, Ms. Yaccarino, with the help of her 1,500-person team, connects established and emerging brands to hundreds of millions of viewers. Ms. Yaccarino also leads a joint Global Advertising & Partnerships team at NBCUniversal, which oversees the company’s One Platform offering worldwide. Ms. Yaccarino is the Chairman of the World Economic Forum’s Taskforce on Future of Work, and the Vice Chairman of The Advertising Council. Ms. Yaccarino sits on the Board of Directors of Ascena Retail Group (OTC: ASNAQ) and is a member of the President’s Council on Sports, Fitness, and Nutrition. Ms. Yaccarino is a graduate of Pennsylvania State University.
Kelli Turner has agreed to serve as a board member commencing upon the effectiveness of the registration statement of which this prospectus forms a part. Ms. Turner is currently President and Chief Operating Officer at SESAC, Inc., a music rights licensing company. She is also general partner of RSL Venture Partners and was on the Board of Directors of Central European Media Enterprises Ltd. (Nasdaq: CETV), a media and entertainment company operating in Central and Eastern European markets, until its sale in October 2020. She was previously President and Chief Financial Officer of RSL Management Corporation from February 2011 to April 2012. Ms. Turner previously was Chief Financial Officer and Executive Vice President of Martha Stewart Living Omnimedia, Inc., a diversified media and merchandising company, from 2009 to 2011, where she was responsible for all aspects of the company’s financial operations, while working closely with the executive team in shaping Martha Stewart Living Omnimedia, Inc.’s business strategy and capital allocation process. A lawyer and a registered certified public accountant with significant experience in the media industry, Ms. Turner joined Martha Stewart Living Omnimedia, Inc. in 2009 from Time Warner Inc., where she held the position of Senior Vice President, Operations in the Office of the Chairman and Chief Executive Officer. Prior to that, she served as Senior Vice President, Business Development for New Line Cinema from 2006 to 2007 after having served as Time Warner Inc.’s Vice President, Investor Relations from 2004 to 2006. Ms. Turner worked in investment banking for years with positions at Allen & Company and Salomon Smith Barney prior to joining Time Warner Inc. Early in her career, she also gained tax and audit experience as a certified public accountant at Ernst & Young, LLP. Ms. Turner received her undergraduate business degree and her law degree from the University of Michigan.
David Bank has agreed to serve as a board member commencing upon the effectiveness of the registration statement of which this prospectus forms a part. Mr. Bank is Executive Vice President, Corporate Development and Strategy for A+E Networks. He was named to the role in July 2019 and is responsible for long-term strategic and business development plans, including identifying potential partners in the marketplace, and exploring opportunities that align with the company’s forecasted objectives. Mr. Bank is a veteran analyst and financial professional with expertise in the media and entertainment industry. Prior to joining A+E Networks, he served as Executive Vice President, Investor Relations at CBS Corp. Previously, Mr. Bank had a 16-year career as a sell-side equity research analyst and Managing Director at RBC Capital Markets where he primarily covered Large Cap Media and Entertainment Companies. He also
served as Associate Director of The US Equity Research Department at RBC Capital Markets. Mr. Bank began his career as an investment banker focusing on financial institutions at First Boston, then joined Furman Selz as an Investment Banker focused on Media. He holds a Bachelor of Arts from Williams College and a Master of Business Administration from The Yale School of Management.
Scott Flanders has agreed to serve as a board member commencing upon the effectiveness of the registration statement of which this prospectus forms a part. In his current role as Chief Executive Officer for eHealth, Inc. (Nasdaq: EHTH), Mr. Flanders has managed the company through vast industry changes. In addition to eHealth, Inc., Mr. Flanders has served as Chief Executive Officer of The Columbia House Company, Freedom Communications and Playboy Enterprises. Mr. Flanders holds a Bachelor of Arts in Economics from the University of Colorado, Boulder and a Juris Doctor from Maurer School of Law at Indiana University. Mr. Flanders is also a Certified Public Accountant.
Jon Jashni has agreed to serve as a board member commencing upon the effectiveness of the registration statement of which this prospectus forms a part. Mr. Jashni is a media investor, advisor and content executive who provides services through his consulting firm Raintree Ventures. He is currently a Founding Advisor to Influence Media, a music fund allied with Warner Music, and Sreda Global, a leading Russian TV studio. Mr. Jashni also serves as a strategic advisor to such entities as Mass Appeal, Bonfire Game Studios, Prometheus Entertainment and Wevr and is a Founding Partner of Synthesis Entertainment. Over the course of his career, Mr. Jashni has been associated with the creation and monetization of content that has generated over $7 billion in gross revenue. From 2006 to 2016, Mr. Jashni was Co-Founder, President and Chief Creative Officer of Legendary Entertainment. During his 10-year tenure at the company he was integral to establishing and evolving the company into a leading, diversified, multi-platform media company. Comprised of film, television, digital and comics divisions, Legendary Entertainment is dedicated to owning, producing and delivering mainstream content to global audiences. Mr. Jashni has been a lead participant in corporate transactions involving such companies as Time Warner, Comcast NBCUniversal, Fidelity, Waddell & Reed, Softbank and Wanda (which purchased Legendary Entertainment in 2016). Mr. Jashni has also been involved in the acquisition and scaling of a vanguard applied analytics entity which developed proprietary methodologies for optimizing media buying, leveraging social media and finely calibrating consumer interactions. Prior to co-founding and joining Legendary Entertainment, Mr. Jashni was President of Hyde Park Entertainment, President of Irving Azoff’s Warner Bros-based Giant Pictures, Senior Vice President of Production at 20th Century Fox and Creative Executive at Columbia Pictures. Mr. Jashni holds a Master of Business Administration in Organizational Behavior from the Anderson School of Management at the University of California, Los Angeles and a Bachelor of Science in Corporate Finance from the University of Southern California.
NUMBER, TERMS OF OFFICE AND ELECTION OF OFFICERS AND DIRECTORS
Upon the effectiveness of the registration statement of which this prospectus forms a part, we expect that our board of directors will consist of seven members. Our board of directors will be 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. In accordance with Nasdaq corporate governance requirements, we are not required to hold an annual meeting until one year after our first fiscal year end following our listing on Nasdaq. The term of office of the first class of directors, consisting of David Bank and Emiliano Calemzuk, will expire at our first annual meeting of stockholders. The term of office of the second class of directors, consisting of Scott Flanders and Jon Jashni, will expire at the second annual meeting of stockholders. The term of office of the third class of directors, consisting of Adam Rothstein, Kelli Turner and Linda Yaccarino, will expire at the third annual meeting of stockholders.
Our officers are appointed by the board of directors and serve at the discretion of the board of directors, rather than for specific terms of office. Our board of directors is authorized to appoint persons to the offices set forth in our bylaws as it deems appropriate. Our bylaws provide that our officers may consist of a Co-Chairman of the Board, Executive Chairman, a Chief Executive Officer, a President, a Chief Financial Officer, Vice Presidents, a Secretary, Assistant Secretaries, a Treasurer and such other offices as may be determined by the board of directors.
DIRECTOR INDEPENDENCE
Nasdaq rules require that a majority of our board of directors be independent within one year of our initial public offering. An “independent director” is defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship, which, in the opinion of the company’s board of directors, would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director. Upon the effectiveness of the registration statement of which this prospectus forms a part, we expect to have five “independent directors” as defined in the Nasdaq rules and applicable SEC rules prior to completion of this offering. We expect a majority of our board of directors to be comprised of independent directors within 12 months from the date of listing to comply with the majority independent board requirement in Rule 5605(b) of the Nasdaq listing rules. Our board has determined that each of Mses. Yaccarino and Turner and Messrs. Bank, Flanders and Jashni are independent directors under applicable SEC and Nasdaq rules. Our independent directors will have regularly scheduled meetings at which only independent directors are present.
EXECUTIVE OFFICER AND DIRECTOR COMPENSATION
None of our officers or directors have received any cash compensation for services rendered to us. Commencing on the date that our securities are first listed on Nasdaq through the earlier of consummation of our initial business combination and our liquidation, we will pay an affiliate of our sponsor a total of $20,000 per month, for up to 24 months for office space, utilities, general office and secretarial support, and administrative and support services. Our founders, officers and directors, or any of their respective affiliates, will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. Our audit committee will review on a quarterly basis all payments that were made to our founders, officers, directors or our or any of their affiliates.
Any such payments prior to an initial business combination will be made from funds held outside the trust account. Other than quarterly audit committee review of such reimbursements, we do not expect to have any additional controls in place governing our reimbursement payments to our directors and executive officers for their out-of-pocket expenses incurred in connection with our activities on our behalf in connection with identifying and consummating an initial business combination. Other than these payments and reimbursements, no compensation of any kind, including finder’s and consulting fees, will be paid by the company to our founders, executive officers and directors, or any of their respective affiliates, prior to completion of our initial business combination.
After the completion of our initial business combination, directors or members of our management team or advisors who remain with us may be paid consulting, management or other compensation from the combined company. All compensation will be fully disclosed to stockholders, to the extent then known, in the tender offer materials or proxy solicitation materials furnished to our stockholders in connection with a proposed business combination. It is unlikely the amount of such compensation will be known at the time, because the directors of the post-combination business will be responsible for determining executive officer and director compensation. Any compensation to be paid to our officers after the completion of our initial business combination will be determined by a compensation committee constituted solely by independent directors.
We are not party to any agreements with our executive officers and directors that provide for benefits upon termination of employment. The existence or terms of any such employment or consulting arrangements may influence our management’s motivation in identifying or selecting a target business, and we do not believe that the ability of our management to remain with us after the consummation of our initial business combination should be a determining factor in our decision to proceed with any potential business combination.
COMMITTEES OF THE BOARD OF DIRECTORS
Upon the effective date of the registration statement of which this prospectus forms a part, our board of directors will have two standing committees: an audit committee and a compensation committee.
Audit Committee
Upon the effectiveness of the registration statement of which this prospectus forms a part, we will establish an audit committee of the board of directors. Under the Nasdaq listing standards and applicable SEC rules, we are required to have three members of the audit committee, all of whom must be independent, subject to the following exception: because we expect to list our securities on Nasdaq in connection with our initial public offering, we have one year from the effective date of the registration statement of which this prospectus forms a part to have our audit committee be comprised solely of independent members. The members of our audit committee will be David Bank, Jon Jashni and Kelli Turner. Kelli Turner has agreed to serve as chair of the audit committee.
Each member of the audit committee is financially literate and our board of directors has determined that Kelli Turner qualifies as an “audit committee financial expert” as defined in applicable SEC rules.
We will adopt an audit committee charter, which will detail the principal functions of the audit committee, including:
•
assisting board oversight of (1) the integrity of our financial statements, (2) our compliance with legal and regulatory requirements, (3) our independent auditor’s qualifications and independence, and (4) the performance of our internal audit function and independent auditors;
•
the appointment, compensation, retention, replacement, and oversight of the work of the independent registered public accounting firm and any other independent registered public accounting firm engaged by us;
•
pre-approving all audit and non-audit services to be provided by the independent registered public accounting firm or any other registered public accounting firm engaged by us, and establishing pre-approval policies and procedures;
•
reviewing and discussing with the independent registered public accounting firm all relationships the independent registered public accounting firm has with us in order to evaluate their continued independence;
•
setting clear policies for audit partner rotation in compliance with applicable laws and regulations;
•
obtaining and reviewing a report, at least annually, from the independent registered public accounting firm describing (1) the independent registered public accounting firm’s internal quality-control procedures and (2) any material issues raised by the most recent internal quality-control review, or peer review, of the audit firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years respecting one or more independent audits carried out by the firm and any steps taken to deal with such issues;
•
reviewing and approving any related party transaction required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC prior to us entering into such transaction;
•
meeting to review and discuss our annual audited financial statements and quarterly financial statements with management and the independent auditor, including reviewing our specific disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”; and
•
reviewing with management, the independent registered public accounting firm, and our legal advisors, as appropriate, any legal, regulatory or compliance matters, including any correspondence with regulators or government agencies and any employee complaints or published reports that raise material issues regarding our financial statements or accounting policies and any significant changes in accounting standards or rules promulgated by the Financial Accounting Standards Board, the SEC or other regulatory authorities.
Compensation Committee
Upon the effectiveness of the registration statement of which this prospectus forms a part, we will establish a compensation committee of the board of directors. Under the Nasdaq listing standards and applicable SEC rules, we are required to have a compensation committee comprised entirely of independent
directors. The members of our Compensation Committee will be David Bank, Scott Flanders and Linda Yaccarino. Scott Flanders has agreed to serve as chair of the compensation committee. We will adopt a compensation committee charter, which will detail the principal functions of the compensation committee, including:
•
reviewing and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer’s compensation, evaluating our Chief Executive Officer’s performance in light of such goals and objectives and determining and approving the remuneration (if any) of our Chief Executive Officer based on such evaluation;
•
reviewing and approving the compensation of all of our other officers;
•
reviewing our executive compensation policies and plans;
•
implementing and administering our incentive compensation equity-based remuneration plans;
•
assisting management in complying with our proxy statement and annual report disclosure requirements;
•
approving all special perquisites, special cash payments and other special compensation and benefit arrangements for our officers and employees;
•
producing a report on executive compensation to be included in our annual proxy statement; and
•
reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors.
The charter will also provide that the compensation committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, legal counsel or other adviser and will be directly responsible for the appointment, compensation and oversight of the work of any such adviser. However, before engaging or receiving advice from a compensation consultant, external legal counsel or any other adviser, the compensation committee will consider the independence of each such adviser, including the factors required by Nasdaq and the SEC.
DIRECTOR NOMINATIONS
We do not have a standing nominating committee, though we intend to form a corporate governance and nominating committee as and when required to do so by applicable law or stock exchange rules. In accordance with Rule 5605(e)(2) of the Nasdaq listing rules, a majority of the independent directors may recommend a director nominee for selection by the board of directors. The board of directors believes that the independent directors can satisfactorily carry out the responsibility of properly selecting or approving director nominees without the formation of a standing nominating committee. In accordance with Rule 5605(e)(1)(A) of the Nasdaq listing rules, all such directors are independent. As there is no standing nominating committee, we do not have a nominating committee charter in place.
Prior to our initial business combination, the board of directors will also consider director candidates recommended for nomination by our stockholders during such times as they are seeking proposed nominees to stand for election at an annual meeting of stockholders (or, if applicable, a special meeting of stockholders). Our stockholders that wish to nominate a director for election to the board of directors should follow the procedures set forth in our bylaws.
We have not formally established any specific, minimum qualifications that must be met or skills that are necessary for directors to possess. In general, in identifying and evaluating nominees for director, the board of directors considers educational background, diversity of professional experience, knowledge of our business, integrity, professional reputation, independence, wisdom, and the ability to represent the best interests of our stockholders.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of our officers currently serves, and in the past year has not served, as a member of the board of directors or compensation committee of any entity that has one or more officers serving on our board of directors.
CODE OF ETHICS
Prior to the effectiveness of the registration statement of which this prospectus is a part, we will have adopted a Code of Ethics applicable to our directors, officers and employees. We will file a copy of our form of Code of Ethics and our audit committee charter as exhibits to the registration statement. You will be able to review these documents by accessing our public filings at the SEC’s website at www.sec.gov. In addition, a copy of the Code of Ethics will be provided without charge upon request from us. We intend to disclose any amendments to or waivers of certain provisions of our Code of Ethics in a Current Report on Form 8-K. See “Where You Can Find Additional Information.”
CONFLICTS OF INTEREST
Each of our officers and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations to at least one other entity pursuant to which such officer or director is or will be required to present a business combination opportunity to such entity. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for an entity to which he or she has then-current fiduciary or contractual obligations, he or she will honor these obligations to present such business combination opportunity to such entity, and only present it to us if such entity rejects the opportunity. We do not believe, however, that the fiduciary duties or contractual obligations of our officers or directors will materially affect our ability to complete our initial business combination. Our amended and restated certificate of incorporation will provide that, prior to the consummation of our initial business combination, we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue and the director or officer is permitted to refer that opportunity to us without violating any legal obligation. Our officers and directors would continue to be subject to all other fiduciary duties owed to us and our stockholders and no other waivers of their respective fiduciary obligations have been provided to any such officers and directors. We do not have any plan for any waiver of the fiduciary duties of our officers and directors post-business combination.
Our founders, officers and directors may become involved with subsequent special purpose acquisition companies similar to our company, although they have agreed not to participate in the formation of, or become an officer or director of, any special purpose acquisition company with a stated focus on the technology, media and telecommunications industry until we have entered into a definitive agreement regarding our initial business combination or we have failed to complete our initial business combination within 24 months after the closing of this offering. For the avoidance of doubt and notwithstanding the foregoing, our founders, executive officers and directors may participate in the formation of, or become an officer or director of, any other special purpose acquisition company that does not have a stated focus stated focus on the technology, media and telecommunications industry (including those with a stated focus on health technology or medical technology) or that is a successor company to an existing special purpose acquisition company in which any of them is interested at any time and whether or not we have entered into a definitive agreement regarding our initial business combination.
Potential investors should also be aware of the following other potential conflicts of interest:
•
None of our officers or directors is required to commit his or her full time to our affairs and, accordingly, may have conflicts of interest in allocating his or her time among various business activities.
•
In the course of their other business activities, our officers and directors may become aware of investment and business opportunities that may be appropriate for presentation to us as well as the other entities with which they are affiliated. Our management may have conflicts of interest in determining to which entity a particular business opportunity should be presented. For a complete description of our management’s other affiliations, see “— Directors, Director Nominees, Executive Officers and Executive Officer Nominees.”
•
Our initial stockholders have agreed to waive their redemption rights with respect to their founder shares, private placement shares and any public shares held by them in connection with the
consummation of our initial business combination. Additionally, our initial stockholders have agreed to waive their redemption rights with respect to their founder shares and private placement shares if we fail to consummate our initial business combination within 24 months after the closing of this offering. However, if our initial stockholders or any of our officers, directors or affiliates acquire public shares in or after this offering, they will be entitled to liquidating distributions from the trust account with respect to such public shares if we fail to consummate our initial business combination within the prescribed time frame. If we do not complete our initial business combination within such applicable time period, the proceeds of the sale of the private placement units held in the trust account will be used to fund the redemption of our public shares, and the private placement warrants will expire worthless. With certain limited exceptions, the founder shares will not be transferable, assignable or salable by our initial stockholders until the earlier of (1) one year after the completion of our initial business combination and (2) the date on which we consummate a liquidation, merger, capital stock exchange, reorganization, or other similar transaction after our initial business combination that results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property. Notwithstanding the foregoing, if the last reported sale price of our common stock shares equals or exceeds $12.00 per share (as adjusted for stock splits, stock 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, the founder shares will be released from the lock-up. With certain limited exceptions, the private placement shares, the private placement warrants and the shares of common stock underlying such warrants, will not be transferable, assignable or salable by our initial stockholders until 30 days after the completion of our initial business combination. Since our sponsor and officers and directors may directly or indirectly own common stock shares and warrants following this offering, our officers and directors may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate our initial business combination.
•
Our key personnel may negotiate employment or consulting agreements with a target business in connection with a particular business combination. These agreements may provide for them to receive compensation following our initial business combination and as a result, may cause them to have conflicts of interest in determining whether to proceed with a particular business combination.
•
Our key personnel may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such key personnel was included by a target business as a condition to any agreement with respect to our initial business combination.
The conflicts described above may not be resolved in our favor. In general, officers and directors of a corporation incorporated under the laws of the State of Delaware are required to present business opportunities to a corporation if:
•
the corporation could financially undertake the opportunity;
•
the opportunity is within the corporation’s line of business; and
•
it would not be fair to the corporation and its stockholders for the opportunity not to be brought to the attention of the corporation.
Accordingly, as a result of multiple business affiliations, our officers and directors have similar legal obligations relating to presenting business opportunities meeting the above-listed criteria to multiple entities. Furthermore, our amended and restated certificate of incorporation will provide that, prior to the consummation of our initial business combination, the doctrine of corporate opportunity will not apply with respect to any of our officers or directors in circumstances where the application of the doctrine would conflict with any fiduciary duties or contractual obligations they may have, and there will not be any expectancy that any of our directors or officers will offer any such corporate opportunity of which he or
she may become aware to us. Below is a table summarizing the entities to which our officers, officer nominees, directors and director nominees currently have fiduciary duties or contractual obligations that may present a conflict of interest:
|
Name of Affiliated Company
|
|
|
Name of Individual
|
|
|
Affiliated Company’s Business
|
|
|
Disruptive Technology Partners
|
|
|
Adam Rothstein(1)
|
|
|
Investments
|
|
|
Disruptive Growth
|
|
|
|
|
|
Investments
|
|
|
Subversive Capital
|
|
|
|
|
|
Investments
|
|
|
1007 Mountain Drive Partners, LLC
|
|
|
|
|
|
Investments
|
|
|
Subversive Capital Acquisition Corp.
|
|
|
|
|
|
Special purpose acquisition company
|
|
|
Roth CH Acquisition I Co.
|
|
|
|
|
|
Special purpose acquisition company
|
|
|
Roth CH Acquisition II Co.
|
|
|
|
|
|
Special purpose acquisition company
|
|
|
Jackpocket, Inc.
|
|
|
|
|
|
Mobile lottery
|
|
|
MercadoLibre Inc.
|
|
|
Emiliano Calemzuk
|
|
|
E-commerce and payments platform
|
|
|
Ascena Retail Group, Inc.
|
|
|
Linda Yaccarino
|
|
|
Apparel
|
|
|
SESAC, Inc.
|
|
|
Kelli Turner
|
|
|
Entertainment
|
|
|
RSL Venture Partners
|
|
|
|
|
|
Investments
|
|
|
eHealth, Inc.
|
|
|
Scott Flanders
|
|
|
Insurance
|
|
|
Raintree Ventures
|
|
|
Jon Jashni
|
|
|
Consulting
|
|
|
Influence Media
|
|
|
|
|
|
Investments
|
|
|
Sreda Media
|
|
|
|
|
|
Television studio
|
|
|
Synthesis Entertainment
|
|
|
|
|
|
Entertainment
|
|
(1)
Mr. Rothstein is a member of the boards of directors of various private companies arising from his affiliation with the disclosed investors. We do not anticipate that any of these companies will be of an appropriate size or target for our initial business combination, nor do we believe that his role as a director of these companies will conflict with his ability to represent us in our search for an initial business combination target.
Accordingly, if any of the above officers or directors become aware of a business combination opportunity which is suitable for any of the above entities to which he or she has then-current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such business combination opportunity to such entity, and only present it to us if such entity rejects the opportunity. We do not believe, however, that any of the foregoing fiduciary duties or contractual obligations will materially affect our ability to complete our initial business combination. Our amended and restated certificate of incorporation will provide that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue.
We are not prohibited from pursuing an initial business combination with a company that is affiliated with our founders, officers or directors. In the event we seek to complete our initial business combination with such a company, we, or a committee of independent and disinterested directors, would obtain an opinion from an independent investment banking firm that is a member of FINRA, or from an independent accounting firm, that such an initial business combination is fair to our company from a financial point of view.
In addition, our sponsor, founders or any of their affiliates may make additional investments in the company in connection with the initial business combination, although our founders and their affiliates have no obligation or current intention to do so. If our sponsor founders or any of their affiliates elects to make additional investments, such proposed investments could influence our founders’ motivation to complete an initial business combination.
In the event that we submit our initial business combination to our public stockholders for a vote, our initial stockholders have agreed, pursuant to the terms of a letter agreement entered into with us (and our anchor investor has agreed, pursuant to a written agreement), to vote their founder shares and private placement shares (and their permitted transferees will agree) and any public shares held by them in favor of our initial business combination.
LIMITATION ON LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS
Our amended and restated certificate of incorporation will provide that our officers and directors will be indemnified by us to the fullest extent authorized by Delaware law, as it now exists or may in the future be amended. In addition, our amended and restated certificate of incorporation will provide that our directors will not be personally liable for monetary damages to us or our stockholders for breaches of their fiduciary duty as directors, except to the extent such exemption from liability or limitation thereof is not permitted by the DGCL.
We will enter into agreements with our officers and directors to provide contractual indemnification in addition to the indemnification provided for in our amended and restated certificate of incorporation. Our bylaws also permit us to maintain insurance on behalf of any officer, director or employee for any liability arising out of his or her actions, regardless of whether Delaware law would permit such indemnification. We will obtain a policy of directors’ and officers’ liability insurance that insures our officers and directors against the cost of defense, settlement or payment of a judgment in some circumstances and insures us against our obligations to indemnify our officers and directors.
These provisions may discourage stockholders from bringing a lawsuit against our directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against officers and directors, even though such an action, if successful, might otherwise benefit us and our stockholders. Furthermore, a stockholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage awards against officers and directors pursuant to these indemnification provisions.
We believe that these provisions, the insurance and the indemnity agreements are necessary to attract and retain talented and experienced officers and directors.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
ADVISORS
In addition to our management and board of directors, we will further be supported by our team of advisors from leading global companies with experience in a wide range of subsectors and functional areas. This support is intended to provide us with access to their expertise and extensive industry networks from which we plan to source and evaluate targets as well as devise plans to optimize any business with which we conduct an initial business combination.
Our team of advisors includes:
Greg Coleman. Greg Coleman is an Executive in Residence at Lerer Hippeau Ventures and sits on numerous boards at the intersection of technology, media and advertising including BuzzFeed Japan, LoopMe, Skimlinks and Botify. Most recently, Mr. Coleman was the President of BuzzFeed and Criteo, an advertising technology company. Mr. Coleman has previously held roles as President and Chief Revenue Officer at the Huffington Post and the EVP of Global Sales at Yahoo.
Beth Gulas. Beth Gulas is a consultant to high profile executives and talent, and acts as a global resource to a variety of industries and individuals. Ms. Gulas has used her skills as an experienced consultant to anticipate, evaluate and manage critical issues such as strategic thinking and managing change, cross-functional teams, leadership development and coaching for both small and large organizations over the course of her career.
Andy Kleinman. Andy Kleinman brings over 20 years of experience working on innovation at the intersection of technology and entertainment. Mr. Kleinman’s latest company, Wonder, created the first mobile operating system capable of turning a smartphone into a gaming and entertainment console. Prior to Wonder, Mr. Kleinman was an early executive and Chief Business Officer at Scopely. Prior to Scopely, Mr. Kleinman was Vice President of International at Zynga.
John Kosner. John Kosner brings four decades of leadership experience across the sports media landscape. Today, Mr. Kosner is president of Kosner Media, a digital media and sports consultancy firm. In 2018, Mr. Kosner and the late NBA Commissioner Emeritus David Stern created Micromanagement Ventures, a portfolio of sports technology start-ups. Previously, Mr. Kosner led ESPN digital media from 2003 to 2017, and prior to that held similar leadership roles at Sports Illustrated, NBA, CBS Sports and NBC Sports.
PRINCIPAL STOCKHOLDERS
The following table sets forth information regarding the beneficial ownership of our common stock as of the date of this prospectus, and as adjusted to reflect the sale of our common stock included in the units offered by this prospectus, and assuming no purchase of units in this offering, by:
•
each person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock;
•
each of our executive officers, executive officer nominees, directors and director nominees; and
•
all our executive officers, executive officer nominees, directors and director nominees as a group.
Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them. The following table does not reflect record or beneficial ownership of the private placement warrants as these warrants are not exercisable within 60 days of the date of this prospectus.
The post-offering ownership percentage column below assumes that the underwriters do not exercise their over-allotment option, that our founders forfeit 937,500 founder shares in the aggregate and that there are 31,952,500 shares of our common stock outstanding after this offering and the concurrent private placement.
| |
|
|
Prior to Offering
|
|
|
Post-Offering
|
|
|
|
|
|
|
|
| |
|
|
Number of
Shares
Beneficially
Owned(2)
|
|
|
Percentage of
Outstanding
Common Stock
|
|
|
Number of
Shares
Beneficially
Owned
|
|
|
Percentage of
Outstanding
Common Stock
|
|
|
|
|
Name and Address of Beneficial Owner(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200 Park Avenue Partners, LLC (our sponsor)
|
|
|
|
|
6,195,040(3) |
|
|
|
|
|
86.19% |
|
|
|
|
|
5,967,375(4) |
|
|
|
|
|
18.68% |
|
|
|
|
|
PA 2 Co-Investment LLC(5)
|
|
|
|
|
621,222 |
|
|
|
|
|
8.64% |
|
|
|
|
|
616,089 |
|
|
|
|
|
1.93% |
|
|
|
|
|
Craig-Hallum Capital Group LLC(6)
|
|
|
|
|
266,238 |
|
|
|
|
|
3.70% |
|
|
|
|
|
264,036 |
|
|
|
|
|
* |
|
|
|
|
|
Adam Rothstein
|
|
|
|
|
6,195,040(3) |
|
|
|
|
|
86.19% |
|
|
|
|
|
5,967,375(4) |
|
|
|
|
|
18.68% |
|
|
|
|
|
Emiliano Calemzuk
|
|
|
|
|
― |
|
|
|
|
|
* |
|
|
|
|
|
― |
|
|
|
|
|
* |
|
|
|
|
|
Michael Del Nin
|
|
|
|
|
― |
|
|
|
|
|
* |
|
|
|
|
|
― |
|
|
|
|
|
* |
|
|
|
|
|
Linda Yaccarino(7)
|
|
|
|
|
20,000 |
|
|
|
|
|
* |
|
|
|
|
|
20,000 |
|
|
|
|
|
* |
|
|
|
|
|
Kelli Turner(7)
|
|
|
|
|
25,000 |
|
|
|
|
|
* |
|
|
|
|
|
25,000 |
|
|
|
|
|
* |
|
|
|
|
|
David Bank(7)
|
|
|
|
|
20,000 |
|
|
|
|
|
* |
|
|
|
|
|
20,000 |
|
|
|
|
|
* |
|
|
|
|
|
Scott Flanders(7)
|
|
|
|
|
20,000 |
|
|
|
|
|
* |
|
|
|
|
|
20,000 |
|
|
|
|
|
* |
|
|
|
|
|
Jon Jashni
|
|
|
|
|
20,000 |
|
|
|
|
|
* |
|
|
|
|
|
20,000 |
|
|
|
|
|
* |
|
|
|
|
|
All directors, director nominees, executive officers
and executive officer nominees as a group (8
individuals)
|
|
|
|
|
6,300,040 |
|
|
|
|
|
87.65% |
|
|
|
|
|
6,072,375 |
|
|
|
|
|
19.00% |
|
|
|
|
*
Less than one percent.
(1)
Unless otherwise noted, the business address of each of the following entities or individuals is 14 Elm Place, Suite 206, Rye, New York 10580.
(2)
Interests shown consist solely of founder shares. Such founder shares are convertible at the option of the holder into shares of Class A Common Stock on a one-for-one basis and will automatically convert into shares of Class A common stock at the time of our initial business combination on a one-for-one basis, subject to adjustment, as described in the section entitled “Description of Securities.”
(3)
Represents 6,195,040 founder shares held of record by our sponsor. Our sponsor is controlled by Mr. Rothstein, as manager, and therefore Mr. Rothstein has voting and dispositive power over the founder shares held by our sponsor and may be deemed to beneficially own such founder shares. In addition, certain of our other officers, directors, and advisors are members of our sponsor.
(4)
Represents 594,076 private placement shares and 5,373,299 founder shares held of record by our sponsor. Our sponsor is controlled by Mr. Rothstein, as manager, and therefore Mr. Rothstein has voting and dispositive power over the private placement shares and founder shares held by our sponsor and may be deemed to beneficially own such founder shares. In addition, certain of our other officers, directors, and advisors are members of our sponsor.
(5)
Represents securities held directly by PA 2 Co-Investment. As the sole member of PA 2 Co-Investment, Cowen Investments II LLC may be deemed to beneficially own the securities owned directly by PA 2 Co-Investment. As the sole member of Cowen Investments II, RCG LV Pearl, LLC (“RCG”) may be deemed to beneficially own the securities owned directly by PA 2 Co-Investment. As the sole member of RCG, Cowen Inc. may be deemed to beneficially own the securities owned directly by PA 2 Co-Investment. As Chief Executive Officer of Cowen Inc., Mr. Jeffrey Solomon may be deemed to beneficially own the securities owned directly by PA 2 Co-Investment. The business address is 599 Lexington Avenue, 20th Floor, New York, NY 10022.
(6)
Includes shares held by certain affiliates of Craig-Hallum Capital Group LLC. The Board of Directors of Craig-Hallum Capital Group LLC (the “CH Board”) controls Craig-Hallum Capital Group LLC. There are 6 members of the CH Board: Brad Baker, Steve Dyer, William Hartfiel III, Kevin Harris, James Zavoral and Tom Emmel. Each member of the CH Board has one vote, and majority approval is required to approve an action. Under the so-called “rule of three,” if voting and dispositive decisions regarding an entity’s securities are made by three or more individuals, and a voting or dispositive decision requires the approval of a majority of those individuals, then none of the individuals is deemed a beneficial owner of the entity’s securities. Based upon the foregoing analysis, no individual member of the CH Board controls Craig-Hallum Capital Group LLC or exercises voting or dispositive control over any of the securities held by Craig-Hallum Capital Group LLC, even those in which he or she holds a pecuniary interest. Accordingly, none of them will be deemed to have or share beneficial ownership of such shares. The business address of each of Craig-Hallum Capital Group LLC and its affiliates is 222 South Ninth Street, Suite 350, Minneapolis, MN 55402.
(7)
Does not include any securities held by 200 Park Avenue Partners, LLC, of which each person is a member.
Upon the completion of this offering, our initial stockholders will hold 7,187,500 founder shares (up to 937,500 of which will be subject to forfeiture by our founders depending on the extent to which the underwriters’ over-allotment option is exercised, in addition to any private placement securities that they may own or may be deemed to beneficially own). Our initial stockholders will have the right to elect all of our directors prior to our initial business combination as a result of holding all of the founder shares. In addition, because of their ownership block, our initial stockholders may be able to effectively influence the outcome of all other matters requiring approval by our stockholders, including the election of directors, amendments to our amended and restated certificate of incorporation and approval of significant corporate transactions, including approval of our initial business combination.
Our founders have committed, pursuant to a written agreement, to purchase an aggregate of 702,500 (or 777,500 if the underwriters’ over-allotment option is exercised in full) private placement units at a price of $10.00 per private placement unit ($7,025,000 in the aggregate or $7,775,000 in the aggregate if the underwriters’ over-allotment option is exercised in full) in a private placement that will occur simultaneously with the closing of this offering. Each private placement unit consists of one private placement share of Class A common stock and one-third of one private placement warrant that is exercisable to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment as provided herein. Private placement warrants may be exercised only for a whole number of shares. The purchase price of the private placement units will be added to the proceeds from this offering to be held in the trust account. If we do not complete our initial business combination within 24 months from the closing of this offering, the proceeds of the sale of the private placement units held in the trust account will be used to fund the redemption of our public shares and the private placement warrants will expire worthless. The private placement securities are subject to the transfer restrictions described below, and the private placement warrants will not be redeemable by us so long as they are held by our sponsor founders or their permitted transferees (except as described below). The private placement warrants held by PA 2 Co-Investment and Craig-Hallum and their respective affiliates, will not be exercisable more than five years from the effective date of the registration statement of which this prospectus forms a part in accordance with FINRA
Rule 5110(g)(8). The private placement warrants purchased by PA 2 Co-Investment and Craig-Hallum and its affiliates are deemed underwriters’ compensation by FINRA pursuant to FINRA Rule 5110. If the private placement warrants are held by holders other than our sponsor founders or their permitted transferees, the private placement warrants will be redeemable by us and exercisable by the holders on the same basis as the warrants included in the units being sold in this offering. Otherwise, the private placement warrants have terms and provisions that are identical to those of the warrants being sold as part of the units in this offering.
Our anchor investor has expressed to us an interest to purchase up to 1,300,000 units in the aggregate in this offering. The anchor investor has expressed to us an interest to purchase up to 1,300,000 units in the offering, and has subscribed for membership interests in our sponsor representing an indirect beneficial interest in up to 184,890 founder shares and 25,977 private placement units (or up to 212,621 founder shares and 28,750 private placement units if the underwriters’ over-allotment option is exercised in full). Our sponsor and our officers and directors are deemed to be our “promoters” as such term is defined under the federal securities laws. See “Certain Relationships and Related Party Transactions” for additional information regarding our relationships with our promoters.
TRANSFERS OF FOUNDER SHARES AND PRIVATE PLACEMENT SECURITIES
The founder shares, private placement securities and any shares of Class A common stock issued upon conversion or exercise thereof are each subject to transfer restrictions pursuant to lock-up provisions in the letter agreement with us to be entered into by our initial stockholders. Those lock-up provisions provide that such securities are not transferable or salable (1) in the case of the founder shares, until the earlier of (A) one year after the completion of our initial business combination or (B) subsequent to our initial business combination, (x) if the last reported sale price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock 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 (y) the date following the completion of our initial business combination on which we complete a liquidation, merger, stock exchange, reorganization or other similar transaction that results in all of our stockholders having the right to exchange their shares of Class A common stock for cash, securities or other property, and (2) in the case of the private placement shares, private placement warrants and the respective Class A common stock underlying such warrants, until 30 days after the completion of our initial business combination, except in each case (a) to our officers or directors, any affiliates or family members of any of our officers or directors, any members of our founders or, their affiliates of our sponsor, or any affiliates of our sponsor, (b) in the case of an individual, by gift to a member of the individual’s immediate family or to a trust, the beneficiary of which is a member of the individual’s immediate family or an affiliate of such person, or to a charitable organization; (c) in the case of an individual, by virtue of laws of descent and distribution upon death of the individual; (d) in the case of an individual, pursuant to a qualified domestic relations order; (e) by private sales or transfers made in connection with the consummation of a business combination at prices no greater than the price at which the shares were originally purchased; (f) in the event of our liquidation prior to our completion of our initial business combination; (g) by virtue of the laws of Delaware or our sponsor’s limited liability company agreement, as amended, upon dissolution of our sponsor; or (h) in the event of our completion of a liquidation, merger, stock exchange, reorganization or other similar transaction which results in all of our stockholders having the right to exchange their shares of Class A common stock for cash, securities or other property subsequent to our completion of our initial business combination; provided, however, that in the case of clauses (a) through (e) these permitted transferees must enter into a written agreement agreeing to be bound by these transfer restrictions and the other restrictions contained in the letter agreement. The founder shares, private placement securities and underlying common stock held by PA 2 Co-Investment and Craig-Hallum and their respective affiliates are deemed underwriters’ compensation by FINRA pursuant to FINRA Rule 5110(e)(1) and will be subject to a 180-day lock-up from the commencement of sales of the offering in accordance with FINRA Rule 5110(e)(1).
REGISTRATION RIGHTS
The holders of the founder shares, private placement securities and shares or warrants that may be issued upon conversion of working capital loans (and any shares of common stock issuable upon the exercise of the private placement warrants or warrants issued upon conversion of the working capital loans
and upon conversion of the founder shares) will be entitled to registration rights pursuant to a registration rights agreement to be signed prior to or on the effective date of this offering requiring us to register such securities for resale (in the case of the founder shares, only after conversion to shares of Class A common stock). The holders of these securities will be entitled to make up to three demands (PA 2 Co-Investment and Craig-Hallum and their respective affiliates will be entitled to one demand in accordance with FINRA Rule 5110(g)(8)), excluding short form registration demands, that we register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to our completion of our initial business combination and rights to require us to register for resale such securities pursuant to Rule 415 under the Securities Act. Notwithstanding the foregoing, PA 2 Co-Investment and Craig-Hallum and their respective affiliates may not exercise its demand or “piggyback” registration rights after five and seven years, respectively, after the effective date of the registration statement of which this prospectus forms a part and may not exercise its demand rights on more than one occasion. However, the registration rights agreement provides that we will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lock-up period, which occurs: (i) in the case of the founder shares, on the earlier of (A) one year after the completion of our initial business combination or (B) subsequent to our initial business combination, (x) if the last reported sale price of Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock 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 (y) the date following the completion of our initial business combination on which we complete a liquidation, merger, stock exchange, reorganization or other similar transaction that results in all of our public stockholders having the right to exchange their shares of Class A common stock for cash, securities or other property, and (ii) in the case of the private placement shares, private placement warrants and the respective shares of Class A common stock underlying such warrants, 30 days after the completion of our initial business combination. We will bear the expenses incurred in connection with the filing of any such registration statements.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
On October 15, 2020, our sponsor purchased an aggregate of 7,187,500 founder shares for an aggregate purchase price of $25,000, or approximately $0.003 per share. The purchase price of the founder shares was determined by dividing the amount of cash contributed to the company by the number of founder shares issued. In December 2020, our sponsor sold 621,222 founder shares to PA 2 Co-Investment, and in January 2021 sold an aggregate of 266,238 founder shares to Craig-Hallum and certain of its affiliates and an aggregate of 105,000 founder shares to our independent director nominees (20,000 shares to each of Ms. Yaccarino and Messrs. Flanders, Bank and Jashni, and 25,000 to Ms. Turner), in each case at their original per share purchase price. Depending on the extent to which the underwriters’ over-allotment option is not fully exercised, our sponsor may forfeit up to 821,741 founder shares, PA 2 Co-Investment may forfeit up to 81,030 founder shares and Craig-Hallum and certain of its affiliates may forfeit up to 34,729 founder shares. Upon the completion of this offering, our founders will hold 7,187,500 founder shares (up to 937,500 of which will be subject to forfeiture by our founders depending on the extent to which the underwriters’ over-allotment option is exercised). Our founders do not intend to purchase any units in this offering.
Our founders have committed, pursuant to a written agreement, to purchase an aggregate of 702,500 (or 777,500 if the underwriters’ over-allotment option is exercised in full) private placement units at a price of $10.00 per private placement unit ($7,025,000 in the aggregate or $7,775,000 in the aggregate if the underwriters’ over-allotment option is exercised in full) in a private placement that will occur simultaneously with the closing of this offering. Each private placement unit consists of one private placement share of Class A common stock and one-third of one private placement warrant is exercisable to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment as provided herein. Private placement warrants may be exercised only for a whole number of shares. The private placement securities (including the Class A common stock issuable upon exercise of the private placement warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold by it until 30 days after the completion of our initial business combination.
As more fully discussed in “Management — Conflicts of Interest,” if any of our officers or directors becomes aware of a business combination opportunity that falls within the line of business of any entity to which he or she has then-current fiduciary or contractual obligations, he or she may be required to present such business combination opportunity to such entity prior to presenting such business combination opportunity to us. Our officers and directors currently have certain relevant fiduciary duties or contractual obligations that may take priority over their duties to us.
We will enter into an Administrative Services Agreement pursuant to which we will pay to our sponsor a total of $20,000 per month, for up to 24 months for office space, utilities, general office and secretarial support, and administrative and support services. Upon completion of our initial business combination or our liquidation, we will cease paying these monthly fees. Accordingly, in the event the consummation of our initial business combination takes the maximum 24 months, our sponsor will be paid a total of $480,000 ($20,000 per month) for office space, utilities, general office and secretarial support, administrative and support services and will be entitled to be reimbursed for any out-of-pocket expenses.
Our founders, officers and directors or any of their respective affiliates will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. Our audit committee will review on a quarterly basis all payments that were made to our founders, officers, directors or our or any of their affiliates and will determine which expenses and the amount of expenses that will be reimbursed. There is no cap or ceiling on the reimbursement of out-of-pocket expenses incurred by such persons in connection with activities on our behalf.
Our sponsor has agreed to loan us up to $300,000 to be used for a portion of the expenses of this offering. As of October 15, 2020, we had not borrowed any amount under the promissory note with our sponsor. Subsequent to October 15, 2020, we borrowed $300,000 under the promissory note with our sponsor. These loans are non-interest bearing, unsecured and are due at the earlier of September 30, 2021 or the closing of this offering. These loans will be repaid upon completion of this offering out of the unused portion of such borrowed funds and out of the $1,000,000 of offering proceeds that has been allocated for the
payment of offering expenses (other than underwriting commissions) not held in the trust account. The value of our sponsor’s interest in this loan transaction corresponds to the principal amount outstanding under any such loan.
In addition, in order to fund working capital deficiencies or finance transaction costs in connection with an intended initial business combination, our sponsor, management team or their affiliates may, but are not obligated to, loan us funds as may be required. If we complete our initial business combination, we would repay such loaned amounts out of the proceeds of the trust account released to us. Otherwise, such loans would be repaid only out of funds held outside the trust account. Up to $1,500,000 of such loans may be convertible at the time of the business combination and at the option of the lender at a price of $10.00 per unit into units consisting of one share of Class A common stock and one-third of one warrant to purchase one share of Class A common stock at a price of $11.50 per share. The units would be identical to the private placement units issued to our founders. PA 2 Co-Investment and Craig-Hallum, and their respective affiliates, will not provide any such working capital loans or receive any such units into which such loans are convertible. The terms of such loans, if any, have not been determined and no written agreements exist with respect to such loans. We do not expect to seek loans from parties other than our sponsor, management team or their affiliates as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account.
After our initial business combination, members of our management team or advisors who remain with us may be paid consulting, management or other fees from the combined company with any and all amounts being fully disclosed to our stockholders, to the extent then known, in the tender offer or proxy solicitation materials, as applicable, furnished to our stockholders. It is unlikely the amount of such compensation will be known at the time of distribution of such tender offer materials or at the time of a stockholder meeting held to consider our initial business combination, as applicable, as it will be up to the directors of the post-combination business to determine executive officer and director compensation.
Our anchor investor has expressed to us an interest to purchase up to 1,300,000 units in the aggregate in this offering. The anchor investor has subscribed for membership interests in our sponsor representing an indirect beneficial interest in up to 184,890 founder shares and 25,977 private placement units (or up to 212,621 founder shares and 28,750 private placement units if the underwriters’ over-allotment option is exercised in full).
The price paid by the anchor investor for the aforementioned indirect ownership of our founder shares and private placement units is the same, proportionally, as that paid by the other members of our sponsor, collectively, for the rest of such membership interests (excluding interests held directly by members of our management, directors and advisors outside of their interests in our sponsor).
There can be no assurance that the anchor investor will acquire any units in this offering, or as to the amount of such units the anchor investor will retain, if any, prior to or upon the consummation of our initial business combination. In the event that the anchor investor purchases such units (either in this offering or after), it has agreed to vote any shares that it holds (including any public shares that it holds) in favor of our initial business combination, and a smaller portion of affirmative votes from other public shareholders would be required to approve our initial business combination. As a result of the private placement units that our anchor investor holds, it may have different interests with respect to a vote on an initial business combination than other public stockholders.
Our anchor investor will not have any rights to the funds held in the trust account beyond the rights afforded to our public stockholders, as described herein.
We have entered into a registration rights agreement with respect to the founder shares, private placement shares, private placement warrants and warrants issued upon conversion of working capital loans (if any), which is described under the heading “Principal Stockholders — Registration Rights.”
Notwithstanding the foregoing, the founder shares and private placement securities purchased by PA 2 Co-Investment and Craig-Hallum and certain of its affiliates are deemed underwriter compensation by FINRA and will be subject to the restrictions imposed by FINRA Rule 5110.
We will also pay to Cowen and Company, LLC, one of the underwriters of this offering and an affiliate of one of our founders, and Craig-Hallum Capital Group LLC, one of the underwriters in this offering and one of our founders, an underwriting discount of $0.20 per unit purchased by it in this offering. We have also engaged the underwriters as advisors in connection with our business combination, pursuant to the Business Combination Marketing Agreement described under “Underwriting — Business Combination Marketing Agreement.” We will pay to the underwriters the Marketing Fee for such services upon the consummation of our initial business combination in an amount equal to, in the aggregate, 3.5% of the gross proceeds of this offering, including any proceeds from the full or partial exercise of the underwriters’ over-allotment option. As a result, the underwriters will not be entitled to such fee unless we consummate our initial business combination.
RELATED PARTY POLICY
We have not yet adopted a formal policy for the review, approval or ratification of related party transactions. Accordingly, the transactions discussed above were not reviewed, approved or ratified in accordance with any such policy.
Prior to the consummation of this offering, we will adopt a code of ethics requiring us to avoid, wherever possible, all conflicts of interests, except under guidelines or resolutions approved by our board of directors (or the appropriate committee of our board) or as disclosed in our public filings with the SEC. Under our code of ethics, conflict of interest situations will include any financial transaction, arrangement or relationship (including any indebtedness or guarantee of indebtedness) involving the company. A form of the code of ethics that we plan to adopt prior to the consummation of this offering is filed as an exhibit to the registration statement of which this prospectus is a part.
In addition, our audit committee, pursuant to a written charter that we will adopt prior to the consummation of this offering, will be responsible for reviewing and approving related party transactions to the extent that we enter into such transactions. An affirmative vote of a majority of the members of the audit committee present at a meeting at which a quorum is present will be required in order to approve a related party transaction. A majority of the members of the entire audit committee will constitute a quorum. Without a meeting, the unanimous written consent of all of the members of the audit committee will be required to approve a related party transaction. A form of the audit committee charter that we plan to adopt prior to the consummation of this offering is filed as an exhibit to the registration statement of which this prospectus is a part. Our audit committee will review on a quarterly basis all payments that were made to our sponsor, officers or directors, or our or any of their affiliates.
These procedures are intended to determine whether any such related party transaction impairs the independence of a director or presents a conflict of interest on the part of a director, employee or officer.
To further minimize conflicts of interest, we have agreed not to consummate an initial business combination with an affiliated entity that is affiliated with any of our sponsor, officers or directors unless we, or a committee of independent and disinterested directors, have obtained an opinion from an independent investment banking firm which is a member of FINRA or an independent accounting firm that our initial business combination is fair to our company from a financial point of view. Furthermore, no finder’s fees, reimbursements or cash payments will be made to our founders, officers or directors, or our or any of their affiliates, for services rendered to us prior to or in connection with the completion of our initial business combination. However, the following payments will be made to our founders, officers or directors, or any of their affiliates, none of which will be made from the proceeds of this offering and the sale of the private placement units held in the trust account prior to the completion of our initial business combination:
•
Repayment of up to $300,000 in loans made to us by our sponsor to cover offering-related and organizational expenses;
•
Payment to an affiliate of our sponsor of a total of $20,000 per month, for up to 24 months for office space, utilities, general office and secretarial support, and administrative and support services;
•
Reimbursement for any out-of-pocket expenses related to identifying, investigating and completing an initial business combination;
•
Payment to the underwriters of their underwriting discount, Marketing Fee, fees for any financial advisory, placement agency or other similar investment banking services the underwriters or their affiliates may provide to our company in the future, and reimbursement of the underwriters for any out-of-pocket expenses incurred by them in connection with the performance of such services; and
•
Repayment of loans which may be made by our sponsor, management team or their affiliates to fund working capital deficiencies or finance transaction costs in connection with an intended initial business combination, the terms of which have not been determined nor have any written agreements been executed with respect thereto. Up to $1,500,000 of such loans may be convertible at the time of the business combination and at the option of the lender at a price of $10.00 per unit into units consisting of one share of Class A common stock and one-third of one warrant to purchase one share of Class A common stock at a price of $11.50 per share. PA 2 Co-Investment and Craig-Hallum, and their respective affiliates, will not provide any such working capital loans or receive any such units into which such loans are convertible.
The above payments may be funded using the net proceeds of this offering and the sale of the private placement units not held in the trust account.
DESCRIPTION OF SECURITIES
Pursuant to our amended and restated certificate of incorporation, our authorized capital stock will consist of 500,000,000 shares of Class A common stock, $0.0001 par value, 25,000,000 shares of Class F common stock, $0.0001 par value, and 5,000,000 shares of undesignated preferred stock, $0.0001 par value. The following description summarizes the material terms of our capital stock. Because it is only a summary, it may not contain all the information that is important to you.
UNITS
Each unit has an offering price of $10.00 and consists of one share of Class A common stock and one-third of one warrant. Each warrant entitles the holder thereof to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment as described in this prospectus. Pursuant to the warrant agreement, a warrant holder may exercise its warrants only for a whole number of shares of Class A common stock. This means that only a whole warrant may be exercised at any given time by a warrant holder. No fractional warrants will be issued upon separation of the units and only whole warrants will trade. Accordingly, unless you purchase at least three units, you will not be able to receive or trade a whole warrant.
We expect that the common stock and warrants constituting the units will begin separate trading on the 52nd day following the date of this prospectus unless Cowen and Company, LLC and Craig-Hallum Capital Group LLC inform us of their decision to allow earlier separate trading, subject to our having filed the Current Report on Form 8-K described below and having issued a press release announcing when such separate trading will begin. Once the shares of Class A common stock and warrants commence separate trading, holders will have the option to continue to hold units or separate their units into the component securities. Holders will need to have their brokers contact our transfer agent in order to separate the units into shares of Class A common stock and warrants.
In no event will the Class A common stock and warrants be traded separately until we have filed with the SEC a Current Report on Form 8-K which includes an audited balance sheet of the Company reflecting our receipt of the gross proceeds at the closing of this offering. We will file the Current Report on Form 8-K promptly after the closing of this offering which will include this audited balance sheet, which is anticipated to take place four business days after the date of this prospectus. If the underwriters’ over-allotment option is exercised following the initial filing of such Current Report on Form 8-K, a second or amended Current Report on Form 8-K will be filed to provide updated financial information to reflect the exercise of the underwriters’ over-allotment option.
COMMON STOCK
Upon the closing of this offering, 31,952,500 shares of our common stock will be outstanding (assuming no exercise of the underwriters’ over-allotment option and the corresponding forfeiture of 937,500 founder shares by our founders), including:
•
25,000,000 shares of our Class A common stock underlying the units being offered in this offering;
•
702,500 shares of our Class A common stock underlying the units being offered in the private placement held concurrently with this offering; and
•
6,250,000 shares of Class F common stock held by our initial stockholders.
Holders of the Class A common stock and holders of the Class F common stock of record are entitled to one vote for each share held on all matters to be voted on by stockholders, including any vote in connection with our initial business combination, and vote together as a single class, except as required by law.
Unless specified in our amended and restated certificate of incorporation or bylaws, or as required by applicable provisions of the DGCL or applicable stock exchange rules, the affirmative vote of a majority of our common stock that are voted is required to approve any such matter voted on by our stockholders. Our board of directors will be divided into three classes, each of which will generally serve for a term of three years with only one class of directors being elected in each year. There is no cumulative voting with respect to the election of directors, with the result that the holders of more than 50% of the shares voted for
the election of directors can elect all of the directors. Our stockholders are entitled to receive ratable dividends when, as and if declared by the board of directors out of funds legally available therefor.
Because our amended and restated certificate of incorporation will authorize the issuance of up to 500,000,000 shares of Class A common stock, if we were to enter into a business combination, we may (depending on the terms of such a business combination) be required to increase the number of shares of common stock which we are authorized to issue at the same time as our stockholders vote on the business combination to the extent we seek stockholder approval in connection with our initial business combination.
In accordance with Nasdaq corporate governance requirements, we are not required to hold an annual meeting until not later than one year after our first fiscal year end following our listing on Nasdaq. Under Section 211(b) of the DGCL, we are, however, required to hold an annual meeting of stockholders for the purposes of electing directors in accordance with our bylaws unless such election is made by written consent in lieu of such a meeting. We may not hold an annual meeting of stockholders to elect new directors prior to the consummation of our initial business combination, and thus we may not be in compliance with Section 211(b) of the DGCL, which requires an annual meeting. Therefore, if our stockholders want us to hold an annual meeting prior to the consummation of our initial business combination, they may attempt to force us to hold one by submitting an application to the Delaware Court of Chancery in accordance with Section 211(c) of the DGCL.
We will provide our public stockholders with the opportunity to redeem all or a portion of their shares upon the completion of our initial business combination at a per share price, payable in cash, equal to the aggregate amount then on deposit in the trust account as of two business days prior to the consummation of our initial business combination, including interest earned on the funds held in the trust account and not previously released to us to pay our franchise and income taxes, divided by the number of then outstanding public shares, subject to the limitations described herein. The amount in the trust account is initially anticipated to be $10.00 per public share. The per share amount we will distribute to investors who properly redeem their shares will not be reduced by the Marketing Fee we will pay to the underwriters. Our initial stockholders have entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares, private placement shares and any public shares held by them in connection with the completion of our initial business combination.
Unlike many blank check companies that hold stockholder votes and conduct proxy solicitations in conjunction with their initial business combinations and provide for related redemptions of public shares for cash upon completion of such initial business combinations even when a vote is not required by applicable law or stock exchange rules, if a stockholder vote is not required by applicable law or stock exchange rules and we do not decide to hold a stockholder vote for business or other reasons, we will, pursuant to our amended and restated certificate of incorporation, conduct the redemptions pursuant to the tender offer rules of the SEC, and file tender offer documents with the SEC prior to completing our initial business combination. Our amended and restated certificate of incorporation will require these tender offer documents to contain substantially the same financial and other information about the initial business combination and the redemption rights as is required under the SEC’s proxy rules. If, however, a stockholder approval of the transaction is required by applicable law or stock exchange rules, or we decide to obtain stockholder approval for business or other reasons, we will, like many blank check companies, offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If we seek stockholder approval, we will complete our initial business combination only if a majority of the outstanding shares of common stock voted are voted in favor of the business combination. A quorum for such meeting will consist of the holders present in person or by proxy of shares of outstanding capital stock of the company representing a majority of the voting power of all outstanding shares of capital stock of the company entitled to vote at such meeting. However, the participation of our founders, officers, directors, advisors or any of their affiliates in privately-negotiated transactions (as described in this prospectus), if any, could result in the approval of our initial business combination even if a majority of our public stockholders vote, or indicate their intention to vote, against such business combination. For purposes of seeking approval of the majority of our outstanding shares of common stock, non-votes will have no effect on the approval of our initial business combination once a quorum is obtained. We intend to give approximately 30 days (but not less than 10 days nor more than 60 days) prior written notice of any such meeting, if required, at which a vote shall be taken to approve our business combination. These quorum and
voting thresholds, and the voting agreements of our initial stockholders and anchor investor, may make it more likely that we will consummate our initial business combination.
If we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation will provide that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from redeeming Excess Shares. However, we would not be restricting our stockholders’ ability to vote all of their shares (including Excess Shares) for or against our initial business combination. Our stockholders’ inability to redeem the Excess Shares will reduce their influence over our ability to complete our initial business combination, and such stockholders could suffer a material loss in their investment if they sell such Excess Shares on the open market. Additionally, such stockholders will not receive redemption distributions with respect to the Excess Shares if we complete the business combination. And, as a result, such stockholders will continue to hold that number of shares exceeding 15% and, in order to dispose such shares would be required to sell their stock in open market transactions, potentially at a loss.
If we seek stockholder approval in connection with our initial business combination, our initial stockholders have agreed (and their permitted transferees will agree) (and our anchor investor has agreed, pursuant to a written agreement), pursuant to the terms of a letter agreement entered into with us, to vote their founder shares, private placement shares and any public shares held by them in favor of our initial business combination. As a result, in addition to our initial stockholders founder shares and the private placement shares, we would need 9,023,751, or 36.1%, of the 25,000,000 public shares sold in this offering to be voted in favor of our initial business combination (assuming all issued and outstanding shares are voted and the over-allotment option is not exercised) in order to have such initial business combination approved; provided, however, that if the anchor investor acquires all of the 1,300,000 units for which it has expressed an interest in acquiring, then we would need 7,723,751 public shares sold in this offering but not held by the anchor investor (30.9% of the 25,000,000 public shares sold in this offering) to be voted in favor of our initial business combination (assuming all outstanding shares are voted and the over-allotment option is not exercised) in order to have such initial business combination approved. Our directors and officers have entered into letter agreements similar to the one signed by our initial stockholders with respect to public shares acquired by them, if any. Additionally, each public stockholder may elect to redeem its public shares without voting and, if they do vote, irrespective of whether they vote for or against the proposed transaction.
Pursuant to our amended and restated certificate of incorporation, if we are unable to complete our initial business combination within 24 months from the closing of this offering, we will: (1) cease all operations except for the purpose of winding up; (2) as promptly as reasonably possible but not more than 10 business days thereafter, 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 us to pay our franchise and income taxes (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 liquidating distributions, if any), subject to applicable law; and (3) as promptly as reasonably possible following such redemption, 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. Our initial stockholders have entered into a letter agreement with us, pursuant to which they have waived their rights to liquidating distributions from the trust account with respect to their founder shares and private placement shares if we fail to complete our initial business combination within 24 months from the closing of this offering. However, if our initial stockholders acquire public shares, they will be entitled to liquidating distributions from the trust account with respect to such public shares if we fail to complete our initial business combination within the allotted 24-month time period.
In the event of a liquidation, dissolution or winding up of the company after a business combination, our stockholders are entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities and after provision is made for each class of stock, if any, having preference over the common stock. Our stockholders have no preemptive or other subscription rights. There are no sinking
fund provisions applicable to the common stock, except that we will provide our stockholders with the opportunity to redeem their public shares for cash equal to their pro rata share of the aggregate amount then on deposit in the trust account, including interest (which interest shall be net of taxes payable), upon the completion of our initial business combination, subject to the limitations described herein.
Private Placement Shares
The private placement shares will not be transferable, assignable or salable until 30 days after the completion of our initial business combination (except, among other limited exceptions as described under “Principal Stockholders — Transfers of Founder Shares and Private Placement Securities,” to our officers and directors and other persons or entities affiliated with our founders). The private placement shares are otherwise identical to the shares of common stock included in the units being sold in this offering, except that: (1) the private placement shares are subject to certain transfer restrictions, as described in more detail below; (2) our initial stockholders have entered into a letter agreement with us, pursuant to which they have agreed: to (a) waive their redemption rights with respect to their founder shares, private placement shares and any public shares held by them in connection with the completion of our initial business combination; (b) waive their redemption rights with respect to their founder shares, private placement shares and any public shares held by them in connection with a stockholder vote to approve an amendment to our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we have not consummated our initial business combination within 24 months from the closing of this offering; and (c) waive their rights to liquidating distributions from the trust account with respect to any founder shares and private placement shares they hold if we fail to complete our initial business combination within 24 months from the closing of this offering (although they will be entitled to liquidating distributions from the trust account with respect to any public shares they hold if we fail to complete our initial business combination within the prescribed time frame); and (3) the founder shares and private placement securities are entitled to registration rights. If we submit our initial business combination to our public stockholders for a vote, our initial stockholders have agreed (and their permitted transferees will agree) (and our anchor investor has agreed, pursuant to a written agreement), pursuant to the terms of a letter agreement entered into with us, to vote their founder shares, private placement shares and any public shares held by them purchased during or after this offering in favor of our initial business combination.
FOUNDER SHARES
The founder shares are identical to the shares of common stock included in the units being sold in this offering, except that: (1) the founder shares are subject to certain transfer restrictions, as described in more detail below; (2) our initial stockholders have entered into a letter agreement with us, pursuant to which they have agreed: to (a) waive their redemption rights with respect to their founder shares, private placement shares and any public shares held by them in connection with the completion of our initial business combination; (b) waive their redemption rights with respect to their founder shares, private placement shares and any public shares held by them in connection with a stockholder vote to approve an amendment to our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we have not consummated our initial business combination within 24 months from the closing of this offering; and (c) waive their rights to liquidating distributions from the trust account with respect to any founder shares and private placement shares they hold if we fail to complete our initial business combination within 24 months from the closing of this offering (although they will be entitled to liquidating distributions from the trust account with respect to any public shares they hold if we fail to complete our initial business combination within the prescribed time frame); (3) the founder shares are automatically convertible into shares of our Class A common stock at the time of our initial business combination on a one-for-one basis, subject to adjustment pursuant to certain anti-dilution rights, as described in more detail below; and (4) the founder shares and private placement shares are entitled to registration rights. If we submit our initial business combination to our public stockholders for a vote, our initial stockholders have agreed (and their permitted transferees will agree) (and our anchor investor has agreed, pursuant to a written agreement), pursuant to the terms of a letter agreement entered into with us, to vote their founder shares, private placement shares and any public shares held by them purchased during or after this offering in favor of our initial business combination.
The shares of Class F common stock will automatically convert into shares of Class A common stock at the time of our initial business combination, or earlier at the option of the holder, on a one-for-one basis, subject to increase in respect of the issuance of certain securities, as provided herein. In the case that additional shares of Class A common stock, or equity-linked securities (as described herein), are issued or deemed issued in excess of the amounts sold in this offering and related to the closing of our initial business combination, the ratio at which shares of Class F common stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding shares of Class F common stock agree to waive such adjustment with respect to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares of Class F common stock will equal, in the aggregate, 20% of the aggregate number of all shares of common stock outstanding upon the completion of this offering, plus the aggregate number of shares of Class A common stock and equity-linked securities issued or deemed issued in connection with our initial business combination (net of the number of shares of Class A common stock redeemed in connection with our initial business combination), excluding any shares or equity-linked securities issued, or to be issued, to any seller in our initial business combination. The term “equity-linked securities” refers to any debt or equity securities that are convertible, exercisable or exchangeable for our Class A common stock issued in a financing transaction in connection with our initial business combination, including but not limited to a private placement of equity or debt.
With certain limited exceptions, the founder shares are not transferable, assignable or salable (except to our officers and directors and other persons or entities affiliated with our founders, each of whom will be subject to the same transfer restrictions) until the earlier of (A) one year after the completion of our initial business combination or (B) subsequent to our initial business combination, (x) if the last reported sale price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock 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 (y) the date following the completion of our initial business combination on which we complete a liquidation, merger, stock exchange, reorganization or other similar transaction that results in all of our public stockholders having the right to exchange their shares of Class A common stock for cash, securities or other property. The founder shares held by PA 2 Co-Investment and Craig-Hallum and their respective affiliates are deemed underwriters’ compensation by FINRA pursuant to FINRA Rule 5110 and will be subject to a 180-day lock-up from the commencement of sales of the offering in accordance with FINRA Rule 5110(e)(1).
PREFERRED STOCK
Our amended and restated certificate of incorporation will authorize 5,000,000 shares of preferred stock and will provide that shares of preferred stock may be issued from time to time in one or more series. Our board of directors will be authorized to fix the voting rights, if any, designations, powers, preferences, the relative, participating, optional or other special rights and any qualifications, limitations and restrictions thereof, applicable to the shares of each series. Our board of directors will be able to, without stockholder approval, issue preferred stock with voting and other rights that could adversely affect the voting power and other rights of the holders of the common stock and could have anti-takeover effects. The ability of our board of directors to issue preferred stock without stockholder approval could have the effect of delaying, deferring or preventing a change of control of us or the removal of existing management. We have no preferred stock outstanding at the date hereof. Although we do not currently intend to issue any shares of preferred stock, we cannot assure you that we will not do so in the future. No shares of preferred stock are being issued or registered in this offering.
WARRANTS
Public Stockholders’ Warrants
Each whole warrant entitles the registered holder to purchase one share of Class A common stock at a price of $11.50 per whole share, subject to adjustment as discussed below, at any time commencing on the later of 12 months from the closing of this offering or 30 days after the completion of our initial business combination. Pursuant to the warrant agreement, a warrant holder may exercise its warrants only for a whole number of shares of Class A common stock. This means only a whole warrant may be exercised at a given
time by a warrant holder. No fractional warrants will be issued upon separation of the units and only whole warrants will trade. Accordingly, unless you purchase at least three units, you will not be able to receive or trade a whole warrant. The warrants will expire five years after the completion of our initial business combination, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation; provided, however, that the private placement warrants held by PA 2 Co-Investment and Craig-Hallum and their respective affiliates will not be exercisable more than five years from the commencement of sales of the offering in accordance with FINRA Rule 5110(g)(8).
We will not be obligated to deliver any shares of Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act covering the issuance of the shares of Class A common issuable upon exercise of the warrants is then effective and a current prospectus relating to those shares of Class A common stock is available, subject to our satisfying our obligations described below with respect to registration. No warrant will be exercisable for cash or on a cashless basis, and we will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption is available. In the event that the conditions in the two immediately preceding sentences are not satisfied with respect to a warrant, the holder of such warrant will not be entitled to exercise such warrant and such warrant may have no value and expire worthless. In the event that a registration statement is not effective for the exercised warrants, the purchaser of a unit containing such warrant will have paid the full purchase price for the unit solely for the share of Class A common stock underlying such unit.
We have agreed that as soon as practicable, but in no event later than 15 business days after the closing of our initial business combination, we will use our best efforts to file with the SEC a registration statement registering the issuance, under the Securities Act, of the shares of Class A common stock issuable upon exercise of the warrants. We will use our best efforts to cause the same to become effective and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the warrants in accordance with the provisions of the warrant agreement. Notwithstanding the above, if our Class A common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, we may, at our option, require holders of public warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event we so elect, we will not be required to file or maintain in effect a registration statement, but will use our best efforts to qualify the shares under applicable blue sky laws to the extent an exemption is not available.
Redemption of warrants when the price per share of Class A common stock equals or exceeds $18.00. Once the warrants become exercisable, we may call the warrants for redemption:
•
in whole and not in part;
•
at a price of $0.01 per warrant;
•
upon not less than 30 days’ prior written notice of redemption (the “30-day redemption period”) to each warrant holder; and
•
if, and only if, the last reported sale price of the Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like and for certain issuances of Class A common stock and equity-linked securities as described below) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date we send the notice of redemption to the warrant holders.
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.
We have established the last of the redemption criterion discussed above to prevent a redemption call unless there is at the time of the call a significant premium to the warrant exercise price. If the foregoing conditions are satisfied and we issue a notice of redemption of the warrants, each warrant holder will be entitled to exercise his, her or its warrant prior to the scheduled redemption date. However, the price of the Class A common stock may fall below the $18.00 redemption trigger price (as adjusted for stock splits, stock
dividends, reorganizations, recapitalizations and the like and for certain issuances of Class A common stock and equity-linked securities as described below) as well as the $11.50 warrant exercise price after the redemption notice is issued.
Redemption of warrants when the price per share of Class A common stock equals or exceeds $10.00. Commencing ninety days after the warrants become exercisable, we may redeem the outstanding warrants (except as described herein with respect to the private placement warrants):
•
in whole and not in part;
•
at a price of $0.10 per warrant provided that holders will be able to exercise their warrants prior to redemption and receive that number of shares of Class A common stock determined by reference to the table below, based on the redemption date and the “fair market value” of our Class A common stock (as defined below) except as otherwise described below;
•
upon a minimum of 30 days’ prior written notice of redemption;
•
if, and only if, the last reported sale price of our Class A common stock equals or exceeds $10.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) on the trading day prior to the date on which we send the notice of redemption to the warrant holders; and
•
if, and only if, there is an effective registration statement covering the issuance of the shares of Class A common stock issuable upon exercise of the warrants and a current prospectus relating thereto is available throughout the 30-day period after written notice of redemption is given.
The numbers in the table below represent the number of shares of Class A common stock that a warrant holder will receive upon cashless exercise in connection with a redemption by us pursuant to this redemption feature, based on the “fair market value” of our Class A common stock on the corresponding redemption date (assuming holders elect to exercise their warrants and such warrants are not redeemed for $0.10 per warrant), determined based on the average of the last reported sales price for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants, and the number of months that the corresponding redemption date precedes the expiration date of the warrants, each as set forth in the table below.
|
Redemption Date (period to expiration
of warrants)
|
|
|
Fair Market Value of Class A Common Stock
|
|
| |
≤$10.00
|
|
|
$11.00
|
|
|
$12.00
|
|
|
$13.00
|
|
|
$14.00
|
|
|
$15.00
|
|
|
$16.00
|
|
|
$17.00
|
|
|
≥$18.00
|
|
|
57 months
|
|
|
|
|
0.257 |
|
|
|
|
|
0.277 |
|
|
|
|
|
0.294 |
|
|
|
|
|
0.310 |
|
|
|
|
|
0.324 |
|
|
|
|
|
0.337 |
|
|
|
|
|
0.348 |
|
|
|
|
|
0.358 |
|
|
|
|
|
0.361 |
|
|
|
54 months
|
|
|
|
|
0.252 |
|
|
|
|
|
0.272 |
|
|
|
|
|
0.291 |
|
|
|
|
|
0.307 |
|
|
|
|
|
0.322 |
|
|
|
|
|
0.335 |
|
|
|
|
|
0.347 |
|
|
|
|
|
0.357 |
|
|
|
|
|
0.361 |
|
|
|
51 months
|
|
|
|
|
0.246 |
|
|
|
|
|
0.268 |
|
|
|
|
|
0.287 |
|
|
|
|
|
0.304 |
|
|
|
|
|
0.320 |
|
|
|
|
|
0.333 |
|
|
|
|
|
0.346 |
|
|
|
|
|
0.357 |
|
|
|
|
|
0.361 |
|
|
|
48 months
|
|
|
|
|
0.241 |
|
|
|
|
|
0.263 |
|
|
|
|
|
0.283 |
|
|
|
|
|
0.301 |
|
|
|
|
|
0.317 |
|
|
|
|
|
0.332 |
|
|
|
|
|
0.344 |
|
|
|
|
|
0.356 |
|
|
|
|
|
0.361 |
|
|
|
45 months
|
|
|
|
|
0.235 |
|
|
|
|
|
0.258 |
|
|
|
|
|
0.279 |
|
|
|
|
|
0.298 |
|
|
|
|
|
0.315 |
|
|
|
|
|
0.330 |
|
|
|
|
|
0.343 |
|
|
|
|
|
0.356 |
|
|
|
|
|
0.361 |
|
|
|
42 months
|
|
|
|
|
0.228 |
|
|
|
|
|
0.252 |
|
|
|
|
|
0.274 |
|
|
|
|
|
0.294 |
|
|
|
|
|
0.312 |
|
|
|
|
|
0.328 |
|
|
|
|
|
0.342 |
|
|
|
|
|
0.355 |
|
|
|
|
|
0.361 |
|
|
|
39 months
|
|
|
|
|
0.221 |
|
|
|
|
|
0.246 |
|
|
|
|
|
0.269 |
|
|
|
|
|
0.290 |
|
|
|
|
|
0.309 |
|
|
|
|
|
0.325 |
|
|
|
|
|
0.340 |
|
|
|
|
|
0.354 |
|
|
|
|
|
0.361 |
|
|
|
36 months
|
|
|
|
|
0.213 |
|
|
|
|
|
0.239 |
|
|
|
|
|
0.263 |
|
|
|
|
|
0.285 |
|
|
|
|
|
0.305 |
|
|
|
|
|
0.323 |
|
|
|
|
|
0.339 |
|
|
|
|
|
0.353 |
|
|
|
|
|
0.361 |
|
|
|
33 months
|
|
|
|
|
0.205 |
|
|
|
|
|
0.232 |
|
|
|
|
|
0.257 |
|
|
|
|
|
0.280 |
|
|
|
|
|
0.301 |
|
|
|
|
|
0.320 |
|
|
|
|
|
0.337 |
|
|
|
|
|
0.352 |
|
|
|
|
|
0.361 |
|
|
|
30 months
|
|
|
|
|
0.196 |
|
|
|
|
|
0.224 |
|
|
|
|
|
0.250 |
|
|
|
|
|
0.274 |
|
|
|
|
|
0.297 |
|
|
|
|
|
0.316 |
|
|
|
|
|
0.335 |
|
|
|
|
|
0.351 |
|
|
|
|
|
0.361 |
|
|
|
27 months
|
|
|
|
|
0.185 |
|
|
|
|
|
0.214 |
|
|
|
|
|
0.242 |
|
|
|
|
|
0.268 |
|
|
|
|
|
0.291 |
|
|
|
|
|
0.313 |
|
|
|
|
|
0.332 |
|
|
|
|
|
0.350 |
|
|
|
|
|
0.361 |
|
|
|
24 months
|
|
|
|
|
0.173 |
|
|
|
|
|
0.204 |
|
|
|
|
|
0.233 |
|
|
|
|
|
0.260 |
|
|
|
|
|
0.285 |
|
|
|
|
|
0.308 |
|
|
|
|
|
0.329 |
|
|
|
|
|
0.348 |
|
|
|
|
|
0.361 |
|
|
|
21 months
|
|
|
|
|
0.161 |
|
|
|
|
|
0.193 |
|
|
|
|
|
0.223 |
|
|
|
|
|
0.252 |
|
|
|
|
|
0.279 |
|
|
|
|
|
0.304 |
|
|
|
|
|
0.326 |
|
|
|
|
|
0.347 |
|
|
|
|
|
0.361 |
|
|
|
18 months
|
|
|
|
|
0.146 |
|
|
|
|
|
0.179 |
|
|
|
|
|
0.211 |
|
|
|
|
|
0.242 |
|
|
|
|
|
0.271 |
|
|
|
|
|
0.298 |
|
|
|
|
|
0.322 |
|
|
|
|
|
0.345 |
|
|
|
|
|
0.361 |
|
|
|
15 months
|
|
|
|
|
0.130 |
|
|
|
|
|
0.164 |
|
|
|
|
|
0.197 |
|
|
|
|
|
0.230 |
|
|
|
|
|
0.262 |
|
|
|
|
|
0.291 |
|
|
|
|
|
0.317 |
|
|
|
|
|
0.342 |
|
|
|
|
|
0.361 |
|
|
|
12 months
|
|
|
|
|
0.111 |
|
|
|
|
|
0.146 |
|
|
|
|
|
0.181 |
|
|
|
|
|
0.216 |
|
|
|
|
|
0.250 |
|
|
|
|
|
0.282 |
|
|
|
|
|
0.312 |
|
|
|
|
|
0.339 |
|
|
|
|
|
0.361 |
|
|
|
9 months
|
|
|
|
|
0.090 |
|
|
|
|
|
0.125 |
|
|
|
|
|
0.162 |
|
|
|
|
|
0.199 |
|
|
|
|
|
0.237 |
|
|
|
|
|
0.272 |
|
|
|
|
|
0.305 |
|
|
|
|
|
0.336 |
|
|
|
|
|
0.361 |
|
|
|
6 months
|
|
|
|
|
0.065 |
|
|
|
|
|
0.099 |
|
|
|
|
|
0.137 |
|
|
|
|
|
0.178 |
|
|
|
|
|
0.219 |
|
|
|
|
|
0.259 |
|
|
|
|
|
0.296 |
|
|
|
|
|
0.331 |
|
|
|
|
|
0.361 |
|
|
|
Redemption Date (period to expiration
of warrants)
|
|
|
Fair Market Value of Class A Common Stock
|
|
| |
≤$10.00
|
|
|
$11.00
|
|
|
$12.00
|
|
|
$13.00
|
|
|
$14.00
|
|
|
$15.00
|
|
|
$16.00
|
|
|
$17.00
|
|
|
≥$18.00
|
|
|
3 months
|
|
|
|
|
0.034 |
|
|
|
|
|
0.065 |
|
|
|
|
|
0.104 |
|
|
|
|
|
0.150 |
|
|
|
|
|
0.197 |
|
|
|
|
|
0.243 |
|
|
|
|
|
0.286 |
|
|
|
|
|
0.326 |
|
|
|
|
|
0.361 |
|
|
|
0 months
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
0.042 |
|
|
|
|
|
0.115 |
|
|
|
|
|
0.179 |
|
|
|
|
|
0.233 |
|
|
|
|
|
0.281 |
|
|
|
|
|
0.323 |
|
|
|
|
|
0.361 |
|
|
The exact fair market value and redemption date may not be set forth in the table above, in which case, if the fair market value is between two values in the table or the redemption date is between two redemption dates in the table, the number of shares of Class A common stock to be issued for each warrant exercised will be determined by a straight-line interpolation between the number of shares set forth for the higher and lower fair market values and the earlier and later redemption dates, as applicable, based on a 365 or 366-day year, as applicable. For example, if the average last reported sale price of our Class A common stock for the 10 trading days ending on the third trading date prior to the date on which the notice of redemption is sent to the holders of the warrants is $11 per share, and at such time there are 57 months until the expiration of the warrants, holders may choose to, in connection with this redemption feature, exercise their warrants for 0.277 shares of Class A common stock for each whole warrant. For an example where the exact fair market value and redemption date are not as set forth in the table above, if the average last reported sale price of our Class A common stock for the 10 trading days ending on the third trading date prior to the date on which the notice of redemption is sent to the holders of the warrants is $13.50 per share, and at such time there are 38 months until the expiration of the warrants, holders may choose to, in connection with this redemption feature, exercise their warrants for 0.298 shares of Class A common stock for each whole warrant. In no event will the warrants be exercisable in connection with this redemption feature for more than 0.361 shares of Class A common stock per warrant (subject to adjustment). Finally, as reflected in the table above, if the warrants are out of the money and about to expire, they cannot be exercised on a cashless basis in connection with a redemption by us pursuant to this redemption feature, since they will not be exercisable for any shares of Class A common stock.
Any public warrants held by our officers or directors will be subject to this redemption feature, except that such officers and directors shall only receive “fair market value” for such public warrants if they exercise their public warrants in connection with such redemption (“fair market value” for such public warrants held by our officers or directors being defined as the last reported sale price of the public warrants on such redemption date).
This redemption feature differs from the typical warrant redemption features used in many other blank check offerings, which typically only provide for a redemption of warrants for cash (other than the private placement warrants) when the trading price for the Class A common stock exceeds $18.00 per share for a specified period of time. This redemption feature is structured to allow for all of the outstanding warrants (other than the private placement warrants) to be redeemed when the Class A common stock is trading at or above $10.00 per share, which may be at a time when the trading price of our Class A common stock is below the exercise price of the warrants. We have established this redemption feature to provide us with the flexibility to redeem the warrants without the warrants having to reach the $18.00 per share threshold set forth above under “— Redemption of warrants when the price per share of Class A common stock equals or exceeds $18.00.” Holders choosing to exercise their warrants in connection with a redemption pursuant to this feature will, in effect, receive a number of shares for their warrants based on an option pricing model with a fixed volatility input as of the date of this prospectus. This redemption right provides us an additional mechanism by which to redeem all of the outstanding warrants, and therefore have certainty as to our capital structure as the warrants would no longer be outstanding and would have been exercised or redeemed, and we will effectively be required to pay the redemption price to warrant holders if we choose to exercise this redemption right and it will allow us to quickly proceed with a redemption of the warrants if we determine it is in our best interest to do so. As such, we would redeem the warrants in this manner when we believe it is in our best interest to update our capital structure to remove the warrants and pay the redemption price to the warrant holders.
As stated above, we can redeem the warrants when the Class A common stock is trading at a price starting at $10.00, which is below the exercise price of $11.50, because it will provide certainty with respect to our capital structure and cash position while providing warrant holders with the opportunity to exercise their warrants on a cashless basis for the applicable number of shares of Class A common stock. If we choose to redeem the warrants when the Class A common stock is trading at a price below the exercise price
of the warrants, this could result in the warrant holders receiving fewer shares of Class A common stock than they would have received if they had chosen to wait to exercise their warrants for shares of Class A common stock if and when shares of Class A common stock were trading at a price higher than the exercise price of $11.50 per share.
No fractional shares of Class A common stock will be issued upon exercise. If, upon exercise, a holder would be entitled to receive a fractional interest in a share, we will round down to the nearest whole number of the number of shares of Class A common stock to be issued to the holder. If, at the time of redemption, the warrants are exercisable for a security other than the shares of Class A common stock pursuant to the warrant agreement (for instance, if we are not the surviving company in our initial business combination), the warrants may be exercised for such security.
Redemption Procedures and Cashless Exercise. If we call the warrants for redemption as described under “— Redemption of warrants when the price per share of Class A common stock equals or exceeds $18.00, our management will have the option to require any holder that wishes to exercise his, her or its warrant to do so on a “cashless basis.” In determining whether to require all holders to exercise their warrants on a “cashless basis,” our management will consider, among other factors, our cash position, the number of warrants that are outstanding and the dilutive effect on our stockholders of issuing the maximum number of shares of Class A common stock issuable upon the exercise of our warrants. If our management takes advantage of this option, all holders of warrants would pay the exercise price by surrendering their warrants for that number of shares of Class A common stock equal to the the lesser of (A) quotient obtained by dividing (x) the product of the number of shares of Class A common stock underlying the warrants, multiplied by the excess of the “fair market value” (defined below) over the exercise price of the warrants by (y) the fair market value and (B) 0.361. The “fair market value” shall mean the average last reported sale price of the Class A common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. If our management takes advantage of this option, the notice of redemption will contain the information necessary to calculate the number of shares of Class A common stock to be received upon exercise of the warrants, including the “fair market value” in such case. Requiring a cashless exercise in this manner will reduce the number of shares to be issued and thereby lessen the dilutive effect of a warrant redemption. We believe this feature is an attractive option to us if we do not need the cash from the exercise of the warrants after our initial business combination. If we call our warrants for redemption and our management does not take advantage of this option, our initial stockholders and their permitted transferees would still be entitled to exercise their private placement warrants for cash or on a cashless basis using the same formula described above that other warrant holders would have been required to use had all warrant holders been required to exercise their warrants on a cashless basis, as described in more detail below.
A holder of a warrant may notify us in writing in the event it elects to be subject to a requirement that such holder will not have the right to exercise such warrant, to the extent that after giving effect to such exercise, such person (together with such person’s affiliates), to the warrant agent’s actual knowledge, would beneficially own in excess of 9.8% (or such other amount as a holder may specify) of the shares of Class A common stock outstanding immediately after giving effect to such exercise.
If the number of outstanding shares of Class A common stock is increased by a stock dividend payable in shares of Class A common stock, or by a split-up of shares of Class A common stock or other similar event, then, on the effective date of such stock dividend, split-up or similar event, the number of shares of Class A common stock issuable on exercise of each warrant will be increased in proportion to such increase in the outstanding shares of Class A common stock. A rights offering to holders of Class A common stock entitling holders to purchase shares of Class A common stock at a price less than the fair market value will be deemed a stock dividend of a number of shares of Class A common stock equal to the product of (1) the number of shares of Class A common stock actually sold in such rights offering (or issuable under any other equity securities sold in such rights offering that are convertible into or exercisable for Class A common stock) multiplied by (2) one minus the quotient of (x) the price per share of Class A common stock paid in such rights offering divided by (y) the fair market value. For these purposes (1) if the rights offering is for securities convertible into or exercisable for Class A common stock, in determining the price payable for Class A common stock, there will be taken into account any consideration received for such rights, as well as any additional amount payable upon exercise or conversion and (2) fair market value means the
volume weighted average price of Class A common stock as reported during the ten trading day period ending on the trading day prior to the first date on which the shares of Class A common stock trade on the applicable exchange or in the applicable market, regular way, without the right to receive such rights.
In addition, if we, at any time while the warrants are outstanding and unexpired, pay a dividend or make a distribution in cash, securities or other assets to the holders of Class A common stock on account of such shares of Class A common stock (or other shares of our capital stock into which the warrants are convertible), other than (a) as described above, (b) certain ordinary cash dividends, (c) to satisfy the redemption rights of the holders of Class A common stock in connection with a proposed initial business combination, (d) to satisfy the redemption rights of the holders of Class A common stock in connection with a stockholder vote to amend our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our Class A common stock if we do not complete our initial business combination within 24 months from the closing of this offering, or (e) in connection with the redemption of our public shares upon our failure to complete our initial business combination, then the warrant exercise price will be decreased, effective immediately after the effective date of such event, by the amount of cash and/or the fair market value of any securities or other assets paid on each share of Class A common stock in respect of such event.
If the number of outstanding shares of our Class A common stock is decreased by a consolidation, combination, reverse stock split or reclassification of shares of Class A common stock or other similar event, then, on the effective date of such consolidation, combination, reverse stock split, reclassification or similar event, the number of shares of Class A common stock issuable on exercise of each warrant will be decreased in proportion to such decrease in outstanding shares of Class A common stock.
Whenever the number of shares of Class A common stock purchasable upon the exercise of the warrants is adjusted, as described above, the warrant exercise price will be adjusted by multiplying the warrant exercise price immediately prior to such adjustment by a fraction (x) the numerator of which will be the number of shares of Class A common stock purchasable upon the exercise of the warrants immediately prior to such adjustment, and (y) the denominator of which will be the number of shares of Class A common stock so purchasable immediately thereafter.
In addition, if (x) we issue additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of our initial business combination at an issue price or effective issue price of less than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by our board of directors and, in the case of any such issuance to our initial stockholders or their affiliates, without taking into account any founder shares or private placement shares held by our initial stockholders or such affiliates, as applicable, prior to such issuance), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of our initial business combination, and (z) the volume weighted average trading price of our Class A common stock during the 10 trading day period starting on the trading day after the day on which we consummate our initial business combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the Market Value, and the $18.00 per share redemption trigger price described above will be adjusted (to the nearest cent) to be equal to 180% of the Market Value.
In case of any reclassification or reorganization of the outstanding shares of Class A common stock (other than those described above or that solely affects the par value of such shares of Class A common stock), or in the case of any merger or consolidation of us with or into another corporation (other than a consolidation or merger in which we are the continuing corporation and that does not result in any reclassification or reorganization of our outstanding shares of Class A common stock), or in the case of any sale or conveyance to another corporation or entity of the assets or other property of us as an entirety or substantially as an entirety in connection with which we are dissolved, the holders of the warrants will thereafter have the right to purchase and receive, upon the basis and upon the terms and conditions specified in the warrants and in lieu of the shares of our Class A common stock immediately theretofore purchasable and receivable upon the exercise of the rights represented thereby, the kind and amount of shares of stock or other securities or property (including cash) receivable upon such reclassification, reorganization, merger or consolidation, or upon a dissolution following any such sale or transfer, that the holder of the warrants would have received if such holder had exercised their warrants immediately prior to such event.
However, if such holders were entitled to exercise a right of election as to the kind or amount of securities, cash or other assets receivable upon such consolidation or merger, then the kind and amount of securities, cash or other assets for which each warrant will become exercisable will be deemed to be the weighted average of the kind and amount received per share by such holders in such consolidation or merger that affirmatively make such election, and if a tender, exchange or redemption offer has been made to and accepted by such holders (other than a tender, exchange or redemption offer made by the company in connection with redemption rights held by stockholders of the company as provided for in the company’s amended and restated certificate of incorporation or as a result of the redemption of shares of Class A common stock by the company if a proposed initial business combination is presented to the stockholders of the company for approval) under circumstances in which, upon completion of such tender or exchange offer, the maker thereof, together with members of any group (within the meaning of Rule 13d-5(b)(1) under the Exchange Act) of which such maker is a part, and together with any affiliate or associate of such maker (within the meaning of Rule 12b-2 under the Exchange Act) and any members of any such group of which any such affiliate or associate is a part, own beneficially (within the meaning of Rule 13d-3 under the Exchange Act) more than 50% of the outstanding shares of Class A common stock, the holder of a warrant will be entitled to receive the highest amount of cash, securities or other property to which such holder would actually have been entitled as a stockholder if such warrant holder had exercised the warrant prior to the expiration of such tender or exchange offer, accepted such offer and all of the Class A common stock held by such holder had been purchased pursuant to such tender or exchange offer, subject to adjustments (from and after the consummation of such tender or exchange offer) as nearly equivalent as possible to the adjustments provided for in the warrant agreement. Additionally, if less than 70% of the consideration receivable by the holders of Class A common stock in such a transaction is payable in the form of Class A common stock in the successor entity that is listed for trading on a national securities exchange or is quoted in an established over-the-counter market, or is to be so listed for trading or quoted immediately following such event, and if the registered holder of the warrant properly exercises the warrant within thirty days following public disclosure of such transaction, the warrant exercise price will be reduced as specified in the warrant agreement based on the per share consideration minus Black-Scholes Warrant Value (as defined in the warrant agreement) of the warrant.
The warrants will be issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. You should review a copy of the warrant agreement, which will be filed as an exhibit to the registration statement of which this prospectus is a part, for a complete description of the terms and conditions applicable to the warrants. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but requires the approval by the holders of at least 65% of the then outstanding public warrants to make any change that adversely affects the interests of the registered holders of public warrants.
The warrants may be exercised upon surrender of the warrant certificate on or prior to the expiration date at the offices of the warrant agent, with the exercise form on the reverse side of the warrant certificate completed and executed as indicated, accompanied by full payment of the exercise price (or on a cashless basis, if applicable), by certified or official bank check payable to us, for the number of warrants being exercised. The warrant holders do not have the rights or privileges of holders of Class A common stock and any voting rights until they exercise their warrants and receive shares of Class A common stock. After the issuance of shares of Class A common stock upon exercise of the warrants, each holder will be entitled to one vote for each share held of record on all matters to be voted on by stockholders.
No fractional warrants will be issued upon separation of the units and only whole warrants will trade.
Private Placement Warrants
The private placement warrants (including the Class A common stock issuable upon exercise of the private placement warrants) will not be transferable, assignable or salable until 30 days after the completion of our initial business combination (except, among other limited exceptions as described under “Principal Stockholders — Transfers of Founder Shares and Private Placement Securities,” to our officers and directors and other persons or entities affiliated with our founders) and they will not be redeemable by us so long as they are held by our initial stockholders or their permitted transferees. Our initial stockholders, or their
permitted transferees, have the option to exercise the private placement warrants on a cashless basis. Otherwise, the private placement warrants have terms and provisions that are identical to those of the warrants being sold as part of the units in this offering. If the private placement warrants are held by holders other than our initial stockholders or their permitted transferees, the private placement warrants will be redeemable by us and exercisable by the holders on the same basis as the warrants included in the units being sold in this offering.
If holders of the private placement warrants elect to exercise them on a cashless basis, they would pay the exercise price by surrendering his, her or its warrants for that number of shares of Class A common stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class A common stock underlying the warrants, multiplied by the excess of the “fair market value” (defined below) over the exercise price of the warrants by (y) the fair market value. The “fair market value” shall mean the average last reported sale price of the Class A common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. The reason that we have agreed that these warrants will be exercisable on a cashless basis so long as they are held by our initial stockholders and their permitted transferees is because it is not known at this time whether they will be affiliated with us following a business combination. If they remain affiliated with us, their ability to sell our securities in the open market will be significantly limited. We expect to have policies in place that prohibit insiders from selling our securities except during specific periods of time. Even during such periods of time when insiders will be permitted to sell our securities, an insider cannot trade in our securities if he or she is in possession of material non-public information. Accordingly, unlike public stockholders who could exercise their warrants and sell the shares of Class A common stock received upon such exercise freely in the open market in order to recoup the cost of such exercise, the insiders could be significantly restricted from selling such securities. As a result, we believe that allowing the holders to exercise such warrants on a cashless basis is appropriate.
In order to fund working capital deficiencies or finance transaction costs in connection with an intended initial business combination, our sponsor, management team or their affiliates may, but are not obligated to, loan us funds as may be required. If we complete our initial business combination, we would repay such loaned amounts. Up to $1,500,000 of such loans may be convertible at the time of the business combination and at the option of the lender at a price of $10.00 per unit into units consisting of one share of Class A common stock and one-third of one warrant to purchase one share of Class A common stock at a price of $11.50 per share. The units would be identical to the private placement units issued to our founders. PA 2 Co-Investment and Craig-Hallum, and their respective affiliates, will not provide any such working capital loans or receive any such units into which such loans are convertible.
DIVIDENDS
We have not paid any cash dividends on our common stock to date and do not intend to pay cash dividends prior to the completion of our initial business combination. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of our initial business combination. The payment of any cash dividends subsequent to our initial business combination will be within the discretion of our board of directors at such time. In addition, our board of directors is not currently contemplating and does not anticipate declaring any stock dividends in the foreseeable future. Further, if we incur any indebtedness in connection with our initial business combination, our ability to declare dividends may be limited by restrictive covenants we may agree to in connection therewith.
OUR TRANSFER AGENT AND WARRANT AGENT
The transfer agent for our common stock and warrant agent for our warrants is Continental Stock Transfer & Trust Company. We have agreed to indemnify Continental Stock Transfer & Trust Company in its roles as transfer agent and warrant agent, its agents and each of its stockholders, directors, officers and employees against all liabilities, including judgments, costs and reasonable counsel fees that may arise out of acts performed or omitted for its activities in that capacity, except for any liability due to any gross negligence, willful misconduct or bad faith of the indemnified person or entity.
OUR AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
Our amended and restated certificate of incorporation will contain certain requirements and restrictions relating to this offering that will apply to us until the completion of our initial business combination. These provisions cannot be amended without the approval of the holders of at least 65% of our common stock. Our initial stockholders who collectively will beneficially own 20% of our common stock upon the closing of this offering (such 20% ownership not including any private placement securities which may be owned by or deemed to be beneficially owned by our initial stockholders or any securities issued upon conversion of working capital loans), may participate in any vote to amend our amended and restated certificate of incorporation and will have the discretion to vote in any manner they choose. Specifically, our amended and restated certificate of incorporation will provide, among other things, that:
•
if we are unable to complete our initial business combination within 24 months from the closing of this offering, we 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 100% of 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 us to pay our franchise and income taxes (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 liquidating distributions, if any), subject to applicable law; and (3) as promptly as reasonably possible following such redemption, 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;
•
prior to our initial business combination, we may not issue additional shares of capital stock that would entitle the holders thereof to: (1) receive funds from the trust account; or (2) vote on any initial business combination;
•
although we do not intend to enter into a business combination with a target business that is affiliated with our founders, our directors or our officers, we are not prohibited from doing so. In the event we enter into such a transaction, we, or a committee of independent and disinterested directors, will obtain an opinion from an independent investment banking firm that is a member of FINRA or from an independent accounting firm that such a business combination is fair to our company from a financial point of view;
•
if a stockholder vote on our initial business combination is not required by applicable law or stock exchange rules and we do not decide to hold a stockholder vote for business or other reasons, we will offer to redeem our public shares pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, and will file tender offer documents with the SEC prior to completing our initial business combination which contain substantially the same financial and other information about our initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act;
•
our initial business combination must occur with one or more target businesses that together have an aggregate fair market value of at least 80% of the value of the trust account (excluding any Marketing Fee and taxes payable on the income earned on the trust account) at the time of the agreement to enter into the initial business combination;
•
if our stockholders approve an amendment to our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of this offering, we will provide our public stockholders with the opportunity to redeem all or a portion of their shares of common stock upon such approval 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 us to pay our franchise and income taxes, divided by the number of then outstanding public shares; and
•
we will not effectuate our initial business combination with another blank check company or a similar company with nominal operations.
In addition, our amended and restated certificate of incorporation will provide that under no circumstances will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001.
CERTAIN ANTI-TAKEOVER PROVISIONS OF DELAWARE LAW AND OUR AMENDED AND RESTATED CERTIFICATE OF INCORPORATION AND BYLAWS
We will be subject to the provisions of Section 203 of the DGCL regulating corporate takeovers upon completion of this offering. This statute prevents certain Delaware corporations, under certain circumstances, from engaging in a “business combination” with:
•
a stockholder who owns 15% or more of our outstanding voting stock (otherwise known as an “interested stockholder”);
•
an affiliate of an interested stockholder; or
•
an associate of an interested stockholder, for three years following the date that the stockholder became an interested stockholder.
A “business combination” includes a merger or sale of more than 10% of our assets. However, the above provisions of Section 203 do not apply if:
•
our board of directors approves the transaction that made the stockholder an “interested stockholder,” prior to the date of the transaction;
•
after the completion of the transaction that resulted in the stockholder becoming an interested stockholder, that stockholder owned at least 85% of our voting stock outstanding at the time the transaction commenced, other than statutorily excluded shares of common stock; or
•
on or subsequent to the date of the transaction, the business combination is approved by our board of directors and authorized at a meeting of our stockholders, and not by written consent, by an affirmative vote of at least two-thirds of the outstanding voting stock not owned by the interested stockholder.
Our authorized but unissued common stock and preferred stock are available for future issuances without stockholder approval and could be utilized for a variety of corporate purposes, including future offerings to raise additional capital, acquisitions and employee benefit plans. The existence of authorized but unissued and unreserved common stock and preferred stock could render more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.
EXCLUSIVE FORUM FOR CERTAIN LAWSUITS
Our amended and restated certificate of incorporation will require, to the fullest extent permitted by law, that derivative actions brought in our name, actions against directors, officers and employees for breach of fiduciary duty and other similar actions may be brought only in the Court of Chancery in the State of Delaware and, if brought outside of Delaware, the stockholder bringing the suit will be deemed to have consented to service of process on such stockholder’s counsel. Although we believe this provision benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, the provision may have the effect of discouraging lawsuits against our directors and officers.
The forum selection provision is intended to apply to the fullest extent permitted by applicable law to the above-specified types of actions and proceedings, including, to the extent permitted by the federal securities laws, to lawsuits asserting both the claims subject to the forum selection provision and federal securities law claims. However, application of the forum selection provision may in some instances be limited by applicable law. For example, the forum selection provision will not apply to suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder because the Exchange Act creates exclusive federal jurisdiction over all such actions. It could apply, however, to a lawsuit asserting both claims subject to the forum selection provision and claims under the Securities Act, because the Securities Act creates concurrent jurisdiction for federal and state courts over suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. There is uncertainty as to whether
a court would enforce this provision with respect to claims under the Securities Act, and our stockholders cannot waive compliance with the federal securities laws or the rules and regulations thereunder.
SPECIAL MEETING OF STOCKHOLDERS
Our bylaws provide that special meetings of our stockholders may be called only by a majority vote of our board of directors, by our chief executive officer or by our chairman, if any.
ADVANCE NOTICE REQUIREMENTS FOR STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
Our bylaws will provide for advance notice procedures with respect to stockholder proposals and the nomination of candidates for election as directors, other than nominations made by or at the direction of our board of directors or a committee of our board of directors. In order for any matter to be “properly brought” before a meeting, a stockholder will have to comply with advance notice requirements and provide us with certain information. Generally, to be timely, a stockholder’s notice must be received at our principal executive offices not less than 90 days nor more than 120 days prior to the first anniversary date of the immediately preceding annual meeting of stockholders. Our bylaws will also specify requirements as to the form and content of a stockholder’s notice. Our bylaws will allow the chairman of the meeting at a meeting of the stockholders to adopt rules and regulations for the conduct of meetings which may have the effect of precluding the conduct of certain business at a meeting if the rules and regulations are not followed. These provisions may also defer, delay or discourage a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to influence or obtain control of us.
SECURITIES ELIGIBLE FOR FUTURE SALE
Immediately after this offering we will have 31,952,500 (or 36,715,000 if the underwriters’ over-allotment option is exercised in full) shares of common stock outstanding on an as converted basis. Of these shares, the 25,000,000 shares (or 28,750,000 shares if the underwriters’ over-allotment option is exercised in full) sold in this offering will be freely tradable without restriction or further registration under the Securities Act, except for any shares purchased by one of our affiliates within the meaning of Rule 144 under the Securities Act. All 6,250,000 (or 7,187,500 if the underwriters’ over-allotment option is exercised in full) founder shares and all 702,500 (or 777,500 if the underwriters’ over-allotment option is exercised in full) private placement units (and the underlying private placement warrants and private placement shares) are restricted securities under Rule 144, in that they were issued in private transactions not involving a public offering, and are subject to transfer restrictions as set forth elsewhere in this prospectus.
RULE 144
Pursuant to Rule 144, a person who has beneficially owned restricted shares of our common stock or warrants for at least six months would be entitled to sell their securities provided that: (1) such person is not deemed to have been one of our affiliates at the time of, or at any time during the three months preceding, a sale; and (2) we are subject to the Exchange Act periodic reporting requirements for at least three months before the sale and have filed all required reports under Section 13 or 15(d) of the Exchange Act during the 12 months (or such shorter period as we were required to file reports) preceding the sale.
Persons who have beneficially owned restricted shares of our common stock or warrants for at least six months but who are our affiliates at the time of, or at any time during the three months preceding, a sale, would be subject to additional restrictions, by which such person would be entitled to sell within any three-month period only a number of securities that does not exceed the greater of:
•
1% of the total number of shares of common stock then outstanding, which will equal 319,525 shares immediately after this offering (or 367,150 if the underwriters exercise their over-allotment option in full); or
•
the average weekly reported trading volume of the common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale.
Sales by our affiliates under Rule 144 are also limited by manner of sale provisions and notice requirements and to the availability of current public information about us.
RESTRICTIONS ON THE USE OF RULE 144 BY SHELL COMPANIES OR FORMER SHELL COMPANIES
Rule 144 is not available for the resale of securities initially issued by shell companies (other than a business combination related shell companies) or issuers that have been at any time previously a shell company. However, Rule 144 also includes an important exception to this prohibition if the following conditions are met:
•
the issuer of the securities that was formerly a shell company has ceased to be a shell company;
•
the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act;
•
the issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the preceding 12 months (or such shorter period that the issuer was required to file such reports and materials), other than Form 8-K reports; and
•
at least one year has elapsed from the time that the issuer filed current Form 10 type information with the SEC reflecting its status as an entity that is not a shell company.
As a result, initial stockholders will be able to sell their founder shares and our founders will be able to sell their founders shares, private placement shares and private placement warrants, as applicable, pursuant to Rule 144 without registration one year after we have completed our initial business combination.
REGISTRATION RIGHTS
The holders of the founder shares, private placement shares, private placement warrants and shares or warrants that may be issued upon conversion of working capital loans (and any shares of common stock issuable upon the exercise of the private placement warrants or warrants issued upon conversion of the working capital loans and upon conversion of the founder shares) will be entitled to registration rights pursuant to a registration rights agreement to be signed prior to or on the effective date of this offering requiring us to register such securities for resale (in the case of the founder shares, only after conversion to shares of Class A common stock). The holders of these securities will be entitled to make up to three demands (PA 2 Co-Investment and Craig-Hallum and their respective affiliates will be entitled to one demand in accordance with FINRA Rule 5110(g)(8)), excluding short form registration demands, that we register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to our completion of our initial business combination and rights to require us to register for resale such securities pursuant to Rule 415 under the Securities Act. Notwithstanding the foregoing, PA 2 Co-Investment and Craig-Hallum and their respective affiliates may not exercise its demand or “piggyback” registration rights after five and seven years, respectively, after the effective date of the registration statement of which this prospectus forms a part and may not exercise its demand rights on more than one occasion. However, the registration rights agreement provides that we will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lock-up period, which occurs: (i) in the case of the founder shares, on the earlier of (A) one year after the completion of our initial business combination or (B) subsequent to our initial business combination, (x) if the last reported sale price of Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock 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 (y) the date following the completion of our initial business combination on which we complete a liquidation, merger, stock exchange, reorganization or other similar transaction that results in all of our public stockholders having the right to exchange their shares of Class A common stock for cash, securities or other property, and (2) in the case of the private placement shares, private placement warrants and the respective shares of Class A common stock underlying such warrants, 30 days after the completion of our initial business combination. We will bear the expenses incurred in connection with the filing of any such registration statements.
LISTING OF SECURITIES
We have been approved to list our units, Class A common stock and warrants on Nasdaq under the symbols “ENFAU,” “ENFA” and “ENFAW,” respectively. We expect that our units will be listed on Nasdaq on or promptly after the effective date of the registration statement. Following the date the shares of our Class A common stock and warrants are eligible to trade separately, we anticipate that the shares of our common stock and warrants will be listed separately and as a unit on Nasdaq.
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a summary of the U.S. federal income tax considerations generally applicable to the ownership and disposition of our units, Class A common stock and warrants, which we refer to collectively as our securities. This summary is based upon U.S. federal income tax law as of the date of this prospectus, which is subject to change or differing interpretations, possibly with retroactive effect. This summary does not discuss all aspects of U.S. federal income taxation that may be important to particular investors in light of their individual circumstances, including investors subject to special tax rules (e.g., financial institutions, insurance companies, broker-dealers, partnerships (including entities or arrangements treated as partnerships for U.S. federal income tax purposes) and their partners, tax-exempt organizations (including private foundations), taxpayers that have elected mark-to-market accounting, S corporations, regulated investment companies, real estate investment trusts, investors that will hold Class A common stock or warrants as part of a straddle, hedge, conversion, or other integrated transaction for U.S. federal income tax purposes, or investors that have a functional currency other than the U.S. dollar), all of whom may be subject to tax rules that differ materially from those summarized below. In addition, this summary does not discuss other U.S. federal tax consequences (e.g., estate or gift tax), any state, local, or non-U.S. tax considerations or the Medicare tax or alternative minimum tax. In addition, this summary is limited to investors that will hold our securities as “capital assets” (generally, property held for investment) under the Internal Revenue Code of 1986, as amended, (the “Code”), and that acquired the securities pursuant to this offering (or, in the case of Class A common stock, upon exercise of warrants so acquired). No ruling from the Internal Revenue Service, (the “IRS”) has been or will be sought regarding any matter discussed herein. No assurance can be given that the IRS would not assert, or that a court would not sustain a position contrary to any of the tax aspects set forth below.
For purposes of this summary, a “U.S. Holder” is a beneficial holder of securities who or that, for U.S. federal income tax purposes is:
•
an individual who is a United States citizen or resident of the United States;
•
a corporation or other entity treated as a corporation for United States federal income tax purposes created in, or organized under the law of, the United States or any state or political subdivision thereof;
•
an estate the income of which is includible in gross income for United States federal income tax purposes regardless of its source; or
•
a trust (A) the administration of which is subject to the primary supervision of a United States court and which has one or more United States persons (within the meaning of the Code) who have the authority to control all substantial decisions of the trust or (B) that has in effect a valid election under applicable Treasury regulations to be treated as a United States person.
A “non-U.S. Holder” is a beneficial holder of shares who or that is neither a U.S. Holder nor a partnership for U.S. federal income tax purposes.
If a partnership (including an entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds our securities, the tax treatment of a partner, member or other beneficial owner in such partnership will generally depend upon the status of the partner, member or other beneficial owner, the activities of the partnership and certain determinations made at the partner, member or other beneficial owner level. If you are a partner, member or other beneficial owner of a partnership holding our securities, you are urged to consult your tax advisor regarding the tax consequences of the ownership and disposition of our securities.
THIS DISCUSSION OF U.S. FEDERAL INCOME TAX CONSIDERATIONS IS FOR GENERAL INFORMATION PURPOSES ONLY AND IS NOT TAX ADVICE. WE URGE PROSPECTIVE HOLDERS TO CONSULT THEIR TAX ADVISORS CONCERNING THE U.S. FEDERAL INCOME TAX CONSEQUENCES TO THEM OF OWNING AND DISPOSING OF OUR SECURITIES, AS WELL AS THE APPLICATION OF ANY, STATE, LOCAL AND NON-U.S. INCOME, ESTATE AND OTHER TAX CONSIDERATIONS.
Personal Holding Company Status
We would be subject to a second level of U.S. federal income tax on a portion of our income if we are determined to be a personal holding company, or PHC, for U.S. federal income tax purposes. A U.S. corporation will generally be classified as a PHC for U.S. federal income tax purposes in a given taxable year if (1) at any time during the last half of such taxable year, five or fewer individuals (without regard to their citizenship or residency and including as individuals for this purpose certain entities such as certain tax-exempt organizations, pension funds, and charitable trusts) own or are deemed to own (pursuant to certain constructive ownership rules) more than 50% of the stock of the corporation by value and (2) at least 60% of the corporation’s adjusted ordinary gross income, as determined for U.S. federal income tax purposes, for such taxable year consists of PHC income (which includes, among other things, dividends, interest, certain royalties, annuities and, under certain circumstances, rents).
Depending on the date and size of our initial business combination, it is possible that at least 60% of our adjusted ordinary gross income may consist of PHC income as discussed above. In addition, depending on the concentration of our stock in the hands of individuals, including the members of our sponsor and certain tax-exempt organizations, pension funds, and charitable trusts, it is possible that more than 50% of our stock will be owned or deemed owned (pursuant to the constructive ownership rules) by five or fewer such persons during the last half of a taxable year. Thus, no assurance can be given that we will not become a PHC following this offering or in the future. If we are or were to become a PHC in a given taxable year, we would be subject to an additional PHC tax, currently 20%, on our undistributed PHC income, which generally includes our taxable income, subject to certain adjustments.
General Treatment of Units
There is no authority directly addressing the treatment, for U.S. federal income tax purposes, of instruments with terms substantially the same as the units and, therefore, their treatment is not entirely clear. The acquisition of a unit should be treated for U.S. federal income tax purposes as the acquisition of one share of our Class A common stock and one-third of one warrant to acquire one share of our Class A common stock. We intend to treat the acquisition of a unit in this manner and, by purchasing a unit, you agree to adopt such treatment for tax purposes. Each holder of a unit must allocate the purchase price paid by such holder for such unit between the share of Class A common stock and the warrant based on their respective relative fair market values. A holder’s initial tax basis in the Class A common stock and the warrant included in each unit should equal the portion of the purchase price of the unit allocated thereto. The separation of the Class A common stock and warrant constituting a unit should not be a taxable event for U.S. federal income tax purposes.
The foregoing treatment of the units and a holder’s purchase price allocation are not binding on the IRS or the courts. Because there is no authority that directly addresses instruments that are similar to the units, no assurance can be given that the IRS or the courts will agree with the characterization described above or the discussion below. Each prospective investor is urged to consult its tax advisors regarding the U.S. federal, state, local and any foreign tax consequences of an investment in a unit (including alternative characterizations of a unit and its components). The following discussion is based on the assumption that the characterization of the Class A common stock and warrants and the allocation described above are accepted for U.S. federal income tax purposes.
U.S. HOLDERS
Taxation of Distributions
If we pay cash distributions to U.S. Holders of shares of our Class A common stock, such distributions will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Distributions in excess of current and accumulated earnings and profits will constitute a return of capital that will be applied against and reduce (but not below zero) the U.S. Holder’s adjusted tax basis in our Class A common stock. Any remaining excess will be treated as gain realized on the sale or other disposition of the Class A common stock and will be treated as described under “U.S. Holders — Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of Class A Common Stock” below.
Dividends we pay to a U.S. Holder that is a taxable corporation generally will qualify for the dividends received deduction if the requisite holding period is satisfied. With certain exceptions (including dividends treated as investment income for purposes of investment interest deduction limitations), and provided certain holding period requirements are met, dividends we pay to a non-corporate U.S. Holder will generally constitute “qualified dividends” that will be subject to tax at the maximum tax rate accorded to long-term capital gains. It is unclear whether the redemption rights with respect to the Class A common stock described in this prospectus may prevent a U.S. Holder from satisfying the applicable holding period requirements with respect to the dividends received deduction or the preferential tax rate on qualified dividend income, as the case may be.
Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of Class A Common Stock
A U.S. Holder will recognize gain or loss on the sale, taxable exchange or other taxable disposition (which would include a dissolution and liquidation in the event we do not complete an initial business combination within 24 months from the closing of this offering) of our Class A common stock. Any such gain or loss will be capital gain or loss, and will be long-term capital gain or loss if the U.S. Holder’s holding period for the Class A common stock so disposed of exceeds one year. It is unclear, however, whether the redemption rights with respect to the Class A common stock described in this prospectus may suspend the running of the applicable holding period for this purpose. The amount of gain or loss recognized will generally be equal to the difference between (1) the sum of the amount of cash and the fair market value of any property received in such disposition (or, if the Class A common stock is held as part of a unit at the time of the disposition, the portion of the amount realized on such disposition that is allocated to the Class A common stock based upon the then fair market values of the Class A common stock and the warrant included in the unit) and (2) the U.S. Holder’s adjusted tax basis in its Class A common stock so disposed of. A U.S. Holder’s adjusted tax basis in its Class A common stock will generally equal the U.S. Holder’s acquisition cost (that is, as discussed above, the portion of the purchase price of a unit allocated to a share of Class A common stock or, as discussed below, the U.S. Holder’s initial basis for Class A common stock received upon exercise of a warrant) less any prior distributions treated as a return of capital. The deductibility of capital losses is subject to limitations.
Redemption of Class A Common Stock
In the event that a U.S. Holder’s Class A common stock is redeemed pursuant to the redemption provisions described in this prospectus under “Description of Securities — Common Stock”, the treatment of the transaction for U.S. federal income tax purposes will depend on whether the redemption qualifies as sale of the Class A common stock under Section 302 of the Code. If the redemption qualifies as a sale of Class A common stock under the tests described below, the tax consequences to the U.S. Holder will be the same as described under “U.S. Holders — Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of Class A Common Stock” above. If the redemption does not qualify as a sale of Class A common stock, the U.S. Holder will be treated as receiving a corporate distribution, the tax consequences of which are described above under “U.S. Holders — Taxation of Distributions”. Whether the redemption qualifies for sale treatment will depend primarily on the total number of shares of our stock treated as held by the U.S. Holder (including any stock constructively owned by the U.S. Holder as a result of owning warrants) both before and after the redemption. The redemption of Class A common stock will generally be treated as a sale of the Class A common stock (rather than as a corporate distribution) if the redemption (1) is “substantially disproportionate” with respect to the U.S. Holder, (2) results in a “complete termination” of the U.S. Holder’s interest in us or (3) is “not essentially equivalent to a dividend” with respect to the U.S. Holder. These tests are explained more fully below.
In determining whether any of the foregoing tests are satisfied, a U.S. Holder takes into account not only stock actually owned by the U.S. Holder, but also shares of our stock that are constructively owned by it. A U.S. Holder may constructively own, in addition to stock owned directly, stock owned by certain related individuals and entities in which the U.S. Holder has an interest or that have an interest in such U.S. Holder, as well as any stock the U.S. Holder has a right to acquire by exercise of an option, which would generally include common stock which could be acquired pursuant to the exercise of the warrants. A redemption of a U.S. Holder’s stock will be substantially disproportionate with respect to the U.S. Holder if the percentage of our outstanding voting stock actually and constructively owned by the U.S. Holder
immediately following the redemption of common stock is, among other requirements, less than 80% of the percentage of our outstanding voting stock actually and constructively owned by the U.S. Holder immediately before the redemption. There will be a complete termination of a U.S. Holder’s interest if either (1) all of the shares of our stock actually and constructively owned by the U.S. Holder are redeemed or (2) all of the shares of our stock actually owned by the U.S. Holder are redeemed and the U.S. Holder is eligible to waive, and effectively waives in accordance with specific rules, the attribution of stock owned by certain family members and the U.S. Holder does not constructively own any other stock (including any stock constructively owned by the U.S. Holder as a result of owning warrants). The redemption of the Class A common stock will not be essentially equivalent to a dividend if the redemption results in a “meaningful reduction” of the U.S. Holder’s proportionate interest in us. Whether the redemption will result in a meaningful reduction in a U.S. Holder’s proportionate interest in us will depend on the particular facts and circumstances. The IRS has indicated in a published ruling that even a small reduction in the proportionate interest of a small minority stockholder in a publicly held corporation who exercises no control over corporate affairs may constitute such a “meaningful reduction.” A U.S. Holder is urged to consult its tax advisors as to the tax consequences of a redemption, including the application of the constructive ownership rules described above.
If none of the foregoing tests is satisfied, the redemption will be treated as a corporate distribution, the tax consequences of which are described under “U.S. Holders — Taxation of Distributions,” above. After the application of those rules, any remaining tax basis of the U.S. Holder in the redeemed Class A common stock should be added to the U.S. Holder’s adjusted tax basis in its remaining stock, or, if it has none, to the U.S. Holder’s adjusted tax basis in its warrants or possibly in other stock constructively owned by it.
Exercise of a Warrant
Except as discussed below with respect to the cashless exercise of a warrant, a U.S. Holder will not recognize gain or loss upon the exercise of a warrant. The U.S. Holder’s tax basis in the share of our Class A common stock received upon exercise of the warrant will generally be an amount equal to the sum of the U.S. Holder’s initial investment in the warrant (i.e., the portion of the U.S. Holder’s purchase price for a unit that is allocated to the warrant, as described above under “— General Treatment of Units”) and the exercise price of such warrant. It is unclear whether a U.S. Holder’s holding period for the Class A common stock would commence on the date of exercise of the warrant or the day following the date of exercise of the warrant; however, in either case the holding period will not include the period during which the U.S. Holder held the warrants.
The tax consequences of a cashless exercise of a warrant are not clear under current tax law. A cashless exercise may be nontaxable, either because the exercise is not a realization event or because the exercise is treated as a recapitalization for U.S. federal income tax purposes. In either situation, a U.S. Holder’s tax basis in the Class A common stock received would generally equal the holder’s tax basis in the warrant. If the cashless exercise were treated as not being a realization event, it is unclear whether a U.S. Holder’s holding period for the Class A common stock would commence on the date of exercise of the warrant or the day following the date of exercise of the warrant. If, however, the cashless exercise were treated as a recapitalization, the holding period of the Class A common stock would include the holding period of the warrant.
It is also possible that a cashless exercise could be treated as a taxable exchange in which gain or loss is recognized. In such event, a U.S. Holder would be deemed to have surrendered a number of warrants having a value equal to the exercise price. The U.S. Holder would recognize capital gain or loss in an amount equal to the difference between the fair market value of the Class A common stock represented by the warrants deemed surrendered and the U.S. Holder’s tax basis in the warrants deemed surrendered. In this case, a U.S. Holder’s tax basis in the Class A common stock received would equal the sum of the U.S. Holder’s initial investment in the warrants exercised (i.e., the portion of the U.S. Holder’s purchase price for the units that is allocated to the warrant, as described above under “— General Treatment of Units”) and the exercise price of such warrants. It is unclear whether a U.S. Holder’s holding period for the Class A common stock would commence on the date of exercise of the warrant or the day following the date of exercise of the warrant.
Due to the absence of authority on the U.S. federal income tax treatment of a cashless exercise, including when a U.S. Holder’s holding period would commence with respect to the Class A common stock received, there can be no assurance which, if any, of the alternative tax consequences and holding periods described above would be adopted by the IRS or a court of law. Accordingly, U.S. Holders are urged to consult their tax advisors regarding the tax consequences of a cashless exercise.
Sale, Exchange, Redemption or Expiration of a Warrant
Upon a sale, exchange (other than by exercise), redemption, or expiration of a warrant, a U.S. Holder will recognize taxable gain or loss in an amount equal to the difference between (1) the amount realized upon such disposition or expiration (or, if the warrant is held as part of a unit at the time of the disposition of the unit, the portion of the amount realized on such disposition that is allocated to the warrant based on the then fair market values of the warrant and the Class A common stock constituting such unit) and (2) the U.S. Holder’s tax basis in the warrant (that is, the portion of the U.S. Holder’s purchase price for a unit that is allocated to the warrant, as described above under “— General Treatment of Units”). Such gain or loss will generally be treated as long-term capital gain or loss if the warrant is held by the U.S. Holder for more than one year at the time of such disposition or expiration. The deductibility of capital losses is subject to certain limitations.
Possible Constructive Distributions
The terms of each warrant provide for an adjustment to the number of shares of Class A common stock for which the warrant may be exercised or to the exercise price of the warrant in certain events, as discussed in the section of this prospectus captioned “Description of Securities — Warrants — Public Stockholders’ Warrants.” An adjustment which has the effect of preventing dilution is generally not a taxable event. Nevertheless, a U.S. Holder of warrants would be treated as receiving a constructive distribution from us if, for example, the adjustment increases the holder’s proportionate interest in our assets or earnings and profits (e.g., through an increase in the number of shares of Class A common stock that would be obtained upon exercise) as a result of a distribution of cash to the holders of shares of our Class A common stock which is taxable to such U.S. Holders as described under “U.S. Holders — Taxation of Distributions” above. Such constructive distribution would be subject to tax as described under that section in the same manner as if such U.S. Holder received a cash distribution from us equal to the fair market value of such increased interest.
NON-U.S. HOLDERS
Taxation of Distributions
In general, any distributions (including constructive distributions) we make to a non-U.S. Holder of shares of our Class A common stock, to the extent paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles), will constitute dividends for U.S. federal income tax purposes and, provided such dividends are not effectively connected with the non-U.S. Holder’s conduct of a trade or business within the United States, we will be required to withhold tax from the gross amount of the dividend at a rate of 30%, unless such non-U.S. Holder is eligible for a reduced rate of withholding tax under an applicable income tax treaty and provides proper certification of its eligibility for such reduced rate (usually on an IRS Form W-8BEN or W-8BEN-E, as applicable). In the case of any constructive dividend, it is possible that this tax would be withheld from any amount owed to a non-U.S. Holder by the applicable withholding agent, including cash distributions on other property or sale proceeds from warrants or other property subsequently paid or credited to such holder. Any distribution not constituting a dividend will be treated first as reducing (but not below zero) the non-U.S. Holder’s adjusted tax basis in its shares of our Class A common stock and, to the extent such distribution exceeds the non-U.S. Holder’s adjusted tax basis, as gain realized from the sale or other disposition of the Class A common stock, which will be treated as described under “Non-U.S. Holders — Gain on Sale, Taxable Exchange or Other Taxable Disposition of Class A Common Stock and Warrants” below. In addition, if we determine that we are classified as a “United States real property holding corporation” (see “Non-U.S. Holders — Gain on Sale, Taxable Exchange or Other Taxable Disposition of Class A Common Stock and Warrants” below), we will withhold 15% of any distribution that exceeds our current and accumulated earnings and profits.
Dividends we pay to a non-U.S. Holder that are effectively connected with such non-U.S. Holder’s conduct of a trade or business within the United States (or, if a tax treaty applies, are attributable to a U.S. permanent establishment or fixed base maintained by the non-U.S. Holder) will generally not be subject to U.S. withholding tax, provided such non-U.S. Holder complies with certain certification and disclosure requirements (usually by providing an IRS Form W-8ECI). Instead, such dividends will generally be subject to U.S. federal income tax, net of certain deductions, at the same graduated individual or corporate rates applicable to U.S. Holders. If the non-U.S. Holder is a corporation, dividends that are effectively connected income may also be subject to a “branch profits tax” at a rate of 30% (or such lower rate as may be specified by an applicable income tax treaty).
Exercise of a Warrant
The U.S. federal income tax treatment of a non-U.S. Holder’s exercise of a warrant generally will correspond to the U.S. federal income tax treatment of the exercise of a warrant by a U.S. Holder, as described under “U.S. Holders — Exercise of a Warrant” above, although to the extent a cashless exercise results in a taxable exchange, the tax consequences to the non-U.S. Holder would be the same as those described below in “Non-U.S. Holders — Gain on Sale, Exchange or Other Taxable Disposition of Class A Common Stock and Warrants.”
Gain on Sale, Exchange or Other Taxable Disposition of Class A Common Stock and Warrants
A non-U.S. Holder will generally not be subject to U.S. federal income or withholding tax in respect of gain recognized on a sale, taxable exchange or other taxable disposition of our Class A common stock, which would include a dissolution and liquidation in the event we do not complete an initial business combination within 24 months from the closing of this offering, or warrants (including an expiration or redemption of our warrants), in each case without regard to whether those securities were held as part of a unit, unless:
•
the gain is effectively connected with the conduct of a trade or business by the non-U.S. Holder within the United States (and, if an applicable tax treaty so requires, is attributable to a U.S. permanent establishment or fixed base maintained by the non-U.S. Holder);
•
the non-U.S. Holder is an individual who is present in the United States for 183 days or more in the taxable year of disposition and certain other conditions are met; or
•
we are or have been a “United States real property holding corporation” for U.S. federal income tax purposes at any time during the shorter of the five-year period ending on the date of disposition or the period that the non-U.S. Holder held our Class A common stock, and, in the case where shares of our Class A common stock are regularly traded on an established securities market, the non-U.S. Holder has owned, directly or constructively, more than 5% of our Class A common stock at any time within the shorter of the five-year period preceding the disposition or such non-U.S. Holder’s holding period for the shares of our Class A common stock. There can be no assurance that our Class A common stock will be treated as regularly traded on an established securities market for this purpose.
Gain described in the first bullet point above will be subject to tax at generally applicable U.S. federal income tax rates. Any gains described in the first bullet point above of a non-U.S. Holder that is a foreign corporation may also be subject to an additional “branch profits tax” at a 30% rate (or lower applicable treaty rate). Gain described in the second bullet point above will generally be subject to a flat 30% U.S. federal income tax. Non-U.S. Holders are urged to consult their tax advisors regarding possible eligibility for benefits under income tax treaties.
If the third bullet point above applies to a non-U.S. Holder, gain recognized by such holder on the sale, exchange or other disposition of our Class A common stock or warrants will be subject to tax at generally applicable U.S. federal income tax rates. In addition, a buyer of our Class A common stock or warrants from such holder may be required to withhold U.S. income tax at a rate of 15% of the amount realized upon such disposition. We cannot determine whether we will be a United States real property holding corporation in the future until we complete an initial business combination. We will be classified as a United States real property holding corporation if the fair market value of our “United States real property interests” equals or exceeds 50% of the sum of the fair market value of our worldwide real property interests plus our other
assets used or held for use in a trade or business, as determined for U.S. federal income tax purposes. If we are or have been a “United States real property holding corporation” you are urged to consult your own tax advisors regarding the application of these rules.
Possible Constructive Distributions
The terms of each warrant provide for an adjustment to the number of shares of Class A common stock for which the warrant may be exercised or to the exercise price of the warrant in certain events, as discussed in the section of this prospectus captioned “Description of Securities — Warrants — Public Stockholders’ Warrants.” An adjustment which has the effect of preventing dilution is generally not a taxable event. Nevertheless, a non-U.S. Holder of warrants would be treated as receiving a constructive distribution from us if, for example, the adjustment increases the holder’s proportionate interest in our assets or earnings and profits (e.g., through an increase in the number of shares of Class A common stock that would be obtained upon exercise) as a result of a distribution of cash to the holders of shares of our Class A common stock which is taxable to such non-U.S. Holders as described under “Non-U.S. Holders — Taxation of Distributions” above. A non-U.S. Holder would be subject to U.S. federal income tax withholding under that section in the same manner as if such non-U.S. Holder received a cash distribution from us equal to the fair market value of such increased interest without any corresponding receipt of cash.
Redemption of Class A Common Stock
The characterization for U.S. federal income tax purposes of the redemption of a non-U.S. Holder’s Class A common stock pursuant to the redemption provisions described in this prospectus under “Description of Securities — Common Stock” will generally correspond to the U.S. federal income tax characterization of such a redemption of a U.S. Holder’s Class A common stock, as described under “U.S. Holders — Redemption of Class A Common Stock” above, and the consequences of the redemption to the non-U.S. Holder will be as described above under “Non-U.S. Holders — Taxation of Distributions” and “Non-U.S. Holders — Gain on Sale, Exchange or Other Taxable Disposition of Class A Common Stock and Warrants,” as applicable.
Foreign Account Tax Compliance Act
Sections 1471 through 1474 of the Code and the Treasury Regulations and administrative guidance promulgated thereunder (commonly referred as the “Foreign Account Tax Compliance Act” or “FATCA”) generally impose withholding at a rate of 30% in certain circumstances on dividends in respect of our securities which are held by or through certain foreign financial institutions (including investment funds), unless any such institution (1) enters into, and complies with, an agreement with the IRS to report, on an annual basis, information with respect to interests in, and accounts maintained by, the institution that are owned by certain U.S. persons and by certain non-U.S. entities that are wholly or partially owned by U.S. persons and to withhold on certain payments, or (2) if required under an intergovernmental agreement between the United States and an applicable foreign country, reports such information to its local tax authority, which will exchange such information with the U.S. authorities. An intergovernmental agreement between the United States and an applicable foreign country may modify these requirements. Accordingly, the entity through which our securities are held will affect the determination of whether such withholding is required. Similarly, dividends in respect of our securities held by an investor that is a non-financial non-U.S. entity that does not qualify under certain exceptions will generally be subject to withholding at a rate of 30%, unless such entity either (1) certifies to us or the applicable withholding agent that such entity does not have any “substantial United States owners” or (2) provides certain information regarding the entity’s “substantial United States owners,” which will in turn be provided to the U.S. Department of Treasury. Prospective investors should consult their tax advisors regarding the possible implications of FATCA on their investment in our securities.
Information Reporting and Backup Withholding
In general, information reporting requirements will apply to payments of dividends and proceeds from the sale of our securities to non-U.S. Holders that are not exempt recipients. We must report annually to the IRS and to each such holder the amount of dividends or other distributions we pay to such non-U.S.
Holder on our shares of Class A common stock and the amount of tax withheld with respect to those distributions, regardless of whether withholding is required. The IRS may make copies of the information returns reporting those dividends and amounts withheld available to the tax authorities in the country in which the non-U.S. Holder resides pursuant to the provisions of an applicable income tax treaty or exchange of information treaty.
The gross amount of dividends and proceeds from the disposition of our Class A common stock or warrants paid to a holder that fails to provide the appropriate certification in accordance with applicable U.S. Treasury regulations generally will be subject to backup withholding at the applicable rate.
Information reporting and backup withholding are generally not required with respect to the amount of any proceeds from the sale by a non-U.S. Holder of Class A common stock or warrants outside the United States through a foreign office of a foreign broker that does not have certain specified connections to the United States. However, if a non-U.S. Holder sells Class A common stock or warrants through a U.S. broker or the U.S. office of a foreign broker, the broker will generally be required to report to the IRS the amount of proceeds paid to such holder, unless the non-U.S. Holder provides appropriate certification (usually on an IRS Form W-8BEN or W-8BEN-E, as applicable) to the broker of its status as a non-U.S. Holder or such non-U.S. Holder is an exempt recipient. In addition, for information reporting purposes, certain non-U.S. brokers with certain relationships with the United States will be treated in a manner similar to U.S. brokers.
Backup withholding is not an additional tax. Any amounts we withhold under the backup withholding rules may be refunded or credited against a holder’s U.S. federal income tax liability, if any, by the IRS if the required information is furnished in a timely manner to the IRS.
UNDERWRITING
Under the terms and subject to the conditions contained in an underwriting agreement dated , 2021 we have agreed to sell to the underwriters named below, for whom Cowen and Company, LLC and Craig-Hallum Capital Group LLC are acting as representatives, the following respective numbers of units:
|
Underwriter
|
|
|
Number of
Units
|
|
|
Cowen and Company, LLC
|
|
|
|
|
|
|
|
|
Craig-Hallum Capital Group LLC
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
25,000,000 |
|
|
The underwriting agreement provides that the underwriters are obligated to purchase all the units in this offering if any are purchased, other than those units covered by the over-allotment option described below.
We have granted to the underwriters a 45-day option from the date of this prospectus to purchase on a pro rata basis up to 3,750,000 additional units at the initial public offering price, less the underwriting discounts and commissions. The option may be exercised only to cover any over-allotments of units.
The underwriters propose to offer the units initially at the public offering price on the cover page of this prospectus and to selling group members at that price less a selling concession of $ per unit.
The following table summarizes the compensation and estimated expenses we will pay:
| |
|
|
Per Unit
|
|
|
Total
|
|
| |
|
|
Without
Over-allotment
|
|
|
With
Over-allotment
|
|
|
Without
Over-allotment
|
|
|
With
Over-allotment
|
|
|
Underwriting Discounts and Commissions paid
by us
|
|
|
|
$ |
0.20 |
|
|
|
|
$ |
0.20 |
|
|
|
|
$ |
5,000,000 |
|
|
|
|
$ |
5,750,000 |
|
|
We estimate that our out-of-pocket expenses for this offering will be approximately $1,000,000. We also have agreed to reimburse the underwriters for up to $25,000 for their FINRA counsel fee. In accordance with FINRA Rule 5110, this reimbursed fee is deemed underwriting compensation for this offering.
The representatives have informed us that the underwriters do not intend to make sales to discretionary accounts.
We, our founders and our officers and directors have agreed that we and they will not issue, 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 or decrease a call equivalent position, without the prior written consent of Cowen and Company, LLC and Craig-Hallum Capital Group LLC for a period of 180 days after the date of this prospectus, with respect to any units (including private placement units), shares of common stock, founder shares, warrants or any securities convertible into, or exercisable, or exchangeable for, shares of common stock owned by it, her or him or 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 units (including private placement units), shares of common stock, founder shares, warrants or any securities convertible into, or exercisable, or exchangeable for, shares of common stock owned by it, her or him, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise or publicly announce any intention to effect any such transaction; provided, however, that we may (1) issue and sell the private placement units; (2) issue and sell the additional units to cover our underwriters’ over-allotment option (if any); (3) register with the SEC pursuant to an agreement to be entered into concurrently with the issuance and sale of the securities in this offering, the resale of the founder shares, the private placement securities and shares or warrants that may be issued upon conversion of working capital loans and the shares of Class A common stock issuable upon exercise of the warrants and the founder shares; and (4) issue securities in connection with our initial business combination. However, the foregoing shall not apply to the forfeiture of any founder shares pursuant to
their terms or any transfer of founder shares to any current or future independent director of the company (as long as such current or future independent director is subject to the terms of the letter agreement, filed as an exhibit to the registration statement of which this prospectus forms a part, at the time of such transfer; and as long as, to the extent any Section 16 reporting obligation is triggered as a result of such transfer, any related Section 16 filing includes a practical explanation as to the nature of the transfer). Cowen and Company, LLC and Craig-Hallum Capital Group LLC in their sole discretion may release any of the securities subject to these lock-up agreements at any time without notice.
Subject to the provisions above, our initial stockholders have agreed not to transfer, assign or sell any of their founder shares until the earlier to occur of: (A) one year after the completion of our initial business combination or (B) subsequent to our initial business combination, (x) if the last reported sale price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock 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 (y) the date following the completion of our initial business combination on which we complete a liquidation, merger, stock exchange, reorganization or other similar transaction that results in all of our stockholders having the right to exchange their shares of Class A common stock for cash, securities or other property (except as described herein under “Principal Stockholders — Transfers of Founder Shares and Private Placement Securities”). Any permitted transferees would be subject to the same restrictions and other agreements of our initial stockholders with respect to any founder shares.
The private placement securities (including the shares Class A common stock issuable upon exercise of the private placement warrants) will not be transferable, assignable or salable until 30 days after the completion of our initial business combination (except with respect to permitted transferees as described herein under “Principal Stockholders — Transfers of Founder Shares and Private Placement Securities”). Any permitted transferees would be subject to the same restrictions and other agreements with respect to any private placement securities.
We have agreed to indemnify the underwriters against certain liabilities under the Securities Act, or contribute to payments that the underwriters may be required to make in that respect.
We expect our units to be listed on Nasdaq, under the symbol “ENFAU” and, once the Class A common stock and warrants begin separate trading, to have our Class A common stock and warrants listed on Nasdaq under the symbols “ENFA” and “ENFAW,” respectively.
Prior to this offering, there has been no public market for our securities. Consequently, the initial public offering price for the units was determined by negotiations between us and the representatives.
The determination of our per unit offering price was more arbitrary than would typically be the case if we were an operating company. Among the factors considered in determining the initial public offering price were the history and prospects of companies whose principal business is the acquisition of other companies, prior offerings of those companies, our management, our capital structure, and currently prevailing general conditions in equity securities markets, including current market valuations of publicly traded companies considered comparable to our company. We cannot assure you, however, that the price at which the units, Class A common stock or warrants will sell in the public market after this offering will not be lower than the initial public offering price or that an active trading market in our units, Class A common stock or warrants will develop and continue after this offering.
If we do not complete our initial business combination within 24 months from the closing of this offering, the trustee and the underwriters have agreed that: (1) they will forfeit any rights or claims to the Marketing Fee, including any accrued interest thereon, then in the trust account; and (2) the Marketing Fee will be distributed on a pro rata basis, together with any accrued interest thereon (which interest shall be net of taxes payable) to the public stockholders.
In connection with this offering, the underwriters may engage in stabilizing transactions, over-allotment transactions, syndicate covering transactions and penalty bids in accordance with Regulation M under the Exchange Act.
•
Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum.
•
Over-allotment involves sales by the underwriters of units in excess of the number of units the underwriters are obligated to purchase, which creates a syndicate short position. The short position may be either a covered short position or a naked short position. In a covered short position, the number of units over-allotted by the underwriters is not greater than the number of units that they may purchase in the over-allotment option. In a naked short position, the number of units involved is greater than the number of units in the over-allotment option. The underwriters may close out any covered short position by either exercising their over-allotment option and/or purchasing units in the open market.
•
Syndicate covering transactions involve purchases of the units in the open market after the distribution has been completed in order to cover syndicate short positions. In determining the source of units to close out the short position, the underwriters will consider, among other things, the price of units available for purchase in the open market as compared to the price at which they may purchase units through the over-allotment option. If the underwriters sell more units than could be covered by the over-allotment option, a naked short position, the position can only be closed out by buying units in the open market. A naked short position is more likely to be created if the underwriters are concerned that there could be downward pressure on the price of the units in the open market after pricing that could adversely affect investors who purchase in this offering.
•
Penalty bids permit the representatives to reclaim a selling concession from a syndicate member when the units originally sold by the syndicate member are purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions.
These stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price of our units or preventing or retarding a decline in the market price of the units. As a result, the price of our units may be higher than the price that might otherwise exist in the open market. These transactions may be effected on Nasdaq or otherwise and, if commenced, may be discontinued at any time.
Except as described under “— Business Combination Marketing Agreement,” we are not under any contractual obligation to engage any of the underwriters to provide any services for us after this offering, and have no present intent to do so. However, any of the underwriters may introduce us to potential target businesses or assist us in raising additional capital in the future. If any of the underwriters provide services to us after this offering, we may pay such underwriter fair and reasonable fees that would be determined at that time in an arm’s length negotiation; provided that no agreement will be entered into with any of the underwriters and no fees for such services will be paid to any of the underwriters prior to the date that is 90 days from the date of this prospectus, unless FINRA determines that such payment would not be deemed underwriters’ compensation in connection with this offering, and we may pay the underwriters of this offering or any entity with which they are affiliated, a finder’s fee or other compensation for services rendered to us in connection with the completion of a business combination.
The 540,192 founder shares (or 621,222 founder shares if the over-allotment option is exercised in full), 75,897 private placement units (or 84,000 private placement units if the over-allotment option is exercised in full) and shares underlying such units and warrants that PA 2 Co-Investment will have purchased after completion of this offering and the 231,509 founder shares (or 266,238 founder shares if the over-allotment option is exercised in full), 32,527 private placement units (or 36,000 private placement units if the over-allotment option is exercised in full) and shares underlying such units and warrants that Craig-Hallum and certain of its affiliates will have purchased after completion of this offering are deemed underwriters’ compensation by FINRA pursuant to FINRA Rule 5110 and will be subject to a 180-day lock-up from the commencement of sales of the offering in accordance with FINRA Rule 5110(e)(1). The private placement warrants will not be exercisable more than five years from the commencement of sales of the offering in accordance with FINRA Rule 5110(g)(8)(C) and will be eligible for one demand and unlimited “piggyback” registration rights for five and seven years, respectively, after the commencement of sales of this offering.
Some of the underwriters and their affiliates have engaged in, and may in the future engage in, investment banking and other commercial dealings in the ordinary course of business with us or our affiliates. They have received, or may in the future receive, customary fees and commissions for these transactions.
In addition, in the ordinary course of their business activities, the underwriters and their affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers. Such investments and securities activities may involve securities and/or instruments of ours or our affiliates. The underwriters and their affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or financial instruments and may hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.
A prospectus in electronic format may be made available on the websites maintained by one or more of the underwriters, or selling group members, if any, participating in this offering and one or more of the underwriters participating in this offering may distribute prospectuses electronically. The representatives may agree to allocate a number of units to underwriters and selling group members for sale to their online brokerage account holders. Internet distributions will be allocated by the underwriters and selling group members that will make internet distributions on the same basis as other allocations.
The units are offered for sale in the United States, Europe, Asia and other jurisdictions where it is lawful to make such offers.
Each of the underwriters has represented and agreed that it has not offered, sold or delivered and will not offer, sell or deliver any of the units directly or indirectly, or distribute this prospectus or any other offering material relating to the units, in or from any jurisdiction except under circumstances that will result in compliance with the applicable laws and regulations thereof and that will not impose any obligations on us except as set forth in the underwriting agreement.
Business Combination Marketing Agreement
We have engaged the underwriters as advisors in connection with our business combination to assist us in holding meetings with our stockholders to discuss the potential business combination and the target business’s attributes, introduce us to potential investors that are interested in purchasing our securities in connection with the potential business combination, assist us in obtaining stockholder approval for the business combination and assist us with our press releases and public filings in connection with the business combination. We will pay the underwriters the Marketing Fee for such services upon the consummation of our initial business combination in an amount equal to, in the aggregate, 3.5% of the gross proceeds of this offering, including any proceeds from the full or partial exercise of the over-allotment option or approximately $8.8 million in the aggregate (or approximately $10.1 million in the aggregate if the underwriters' over-allotment option is exercised in full).
EUROPEAN ECONOMIC AREA
In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”), each underwriter represents and agrees that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the “Relevant Implementation Date”) it has not made and will not make an offer of units to the public in that Relevant Member State prior to the publication of a prospectus in relation to the units which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date, make an offer of units to the public in that Relevant Member State at any time,
(a)
to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;
(b)
to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000; and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts;
(c)
to fewer than 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive) subject to obtaining the prior consent of the manager for any such offer; or
(d)
in any other circumstances which do not require the publication by the issuer of a prospectus pursuant to Article 3 of the Prospectus Directive.
For the purposes of this provision, the expression an “offer of units to the public” in relation to any units in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the units to be offered so as to enable an investor to decide to purchase or subscribe the units, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression Prospectus Directive means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State;
NOTICE TO INVESTORS IN THE UNITED KINGDOM
Each of the underwriters severally represents, warrants and agrees as follows:
(a)
it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of section 21 of FSMA) to persons who have professional experience in matters relating to investments falling with Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 or in circumstances in which section 21 of FSMA does not apply to the company; and
(b)
it has complied with, and will comply with all applicable provisions of FSMA with respect to anything done by it in relation to the units in, from or otherwise involving the United Kingdom.
NOTICE TO RESIDENTS OF JAPAN
The underwriters will not offer or sell any of our units directly or indirectly in Japan or to, or for the benefit of any Japanese person or to others, for re-offering or re-sale directly or indirectly in Japan or to any Japanese person, except in each case pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Securities and Exchange Law of Japan and any other applicable laws and regulations of Japan. For purposes of this paragraph, “Japanese person” means any person resident in Japan, including any corporation or other entity organized under the laws of Japan.
NOTICE TO RESIDENTS OF HONG KONG
The underwriters and each of their affiliates have not (1) offered or sold, and will not offer or sell, in Hong Kong, by means of any document, our units other than (A) to “professional investors” as defined in the Securities and Futures Ordinance (Cap.571) of Hong Kong and any rules made under that Ordinance or (B) in other circumstances which do not result in the document being a “prospectus” as defined in the Companies Ordinance (Cap. 32 of Hong Kong) or which do not constitute an offer to the public within the meaning of that Ordinance or (2) issued or had in its possession for the purposes of issue, and will not issue or have in its possession for the purposes of issue, whether in Hong Kong or elsewhere any advertisement, invitation or document relating to our units which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to our securities which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” as defined in the Securities and Futures Ordinance and any rules made under that Ordinance. The contents of this document have not been reviewed by any regulatory authority in Hong Kong. You are advised to exercise caution in relation to the offer. If you are in any doubt about any of the contents of this document, you should obtain independent professional advice.
NOTICE TO RESIDENTS OF SINGAPORE
This prospectus or any other offering material relating to our units has not been and will not be registered as a prospectus with the Monetary Authority of Singapore, and the units will be offered in Singapore pursuant to exemptions under Section 274 and Section 275 of the Securities and Futures Act, Chapter 289 of Singapore (the “Securities and Futures Act”). Accordingly our units may not be offered or sold, or be the subject of an invitation for subscription or purchase, nor may this prospectus or any other offering material relating to our units be circulated or distributed, whether directly or indirectly, to the public or any member of the public in Singapore other than (a) to an institutional investor or other person specified in Section 274 of the Securities and Futures Act, (b) to a sophisticated investor, and in accordance with the conditions specified in Section 275 of the Securities and Futures Act or (c) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the Securities and Futures Act.
NOTICE TO RESIDENTS OF GERMANY
Each person who is in possession of this prospectus is aware that no German sales prospectus (Verkaufsprospekt) within the meaning of the Securities Sales Prospectus Act (Wertpapier-Verkaufsprospektgesetz, the “Act”) of the Federal Republic of Germany has been or will be published with respect to our units. In particular, each underwriter has represented that it has not engaged and has agreed that it will not engage in a public offering (offentliches Angebot) within the meaning of the Act with respect to any of our units otherwise then in accordance with the Act and all other applicable legal and regulatory requirements.
NOTICE TO RESIDENTS OF FRANCE
The units are being issued and sold outside the Republic of France and that, in connection with their initial distribution, it has not offered or sold and will not offer or sell, directly or indirectly, any units to the public in the Republic of France, and that it has not distributed and will not distribute or cause to be distributed to the public in the Republic of France this prospectus or any other offering material relating to the units, and that such offers, sales and distributions have been and will be made in the Republic of France only to qualified investors (investisseurs qualifiés) in accordance with Article L.411-2 of the Monetary and Financial Code and decrét no. 98-880 dated October 1, 1998.
NOTICE TO RESIDENTS OF THE NETHERLANDS
Our units may not be offered, sold, transferred or delivered in or from the Netherlands as part of their initial distribution or at any time thereafter, directly or indirectly, other than to, individuals or legal entities situated in The Netherlands who or which trade or invest in securities in the conduct of a business or profession (which includes banks, securities intermediaries (including dealers and brokers), insurance companies, pension funds, collective investment institution, central governments, large international and supranational organizations, other institutional investors and other parties, including treasury departments of commercial enterprises, which as an ancillary activity regularly invest in securities; hereinafter, “Professional Investors”); provided that in the offer, prospectus and in any other documents or advertisements in which a forthcoming offering of our units is publicly announced (whether electronically or otherwise) in The Netherlands it is stated that such offer is and will be exclusively made to such Professional Investors. Individual or legal entities who are not Professional Investors may not participate in the offering of our units, and this prospectus or any other offering material relating to our units may not be considered an offer or the prospect of an offer to sell or exchange our units.
NOTICE TO CANADIAN RESIDENTS
Resale Restrictions
The distribution of units in Canada is being made only in the provinces of Ontario, Quebec, Alberta and British Columbia on a private placement basis exempt from the requirement that we prepare and file a prospectus with the securities regulatory authorities in each province where trades of these securities are made. Any resale of the units in Canada must be made under applicable securities laws which may vary
depending on the relevant jurisdiction, and which may require resales to be made under available statutory exemptions or under a discretionary exemption granted by the applicable Canadian securities regulatory authority. Purchasers are advised to seek legal advice prior to any resale of the securities.
Representations of Canadian Purchasers
By purchasing units in Canada and accepting delivery of a purchase confirmation, a purchaser is representing to us and the dealer from whom the purchase confirmation is received that:
•
the purchaser is entitled under applicable provincial securities laws to purchase the units without the benefit of a prospectus qualified under those securities laws as it is an “accredited investor” as defined under National Instrument 45-106 — Prospectus Exemptions;
•
the purchaser is a “permitted client” as defined in National Instrument 31-103 — Registration Requirements, Exemptions and Ongoing Registrant Obligations;
•
where required by law, the purchaser is purchasing as principal and not as agent; and
•
the purchaser has reviewed the text above under Resale Restrictions.
NOTICE TO PROSPECTIVE INVESTORS IN SWITZERLAND
The units may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange (“SIX”) or on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the units or the offering may be publicly distributed or otherwise made publicly available in Switzerland.
Neither this document nor any other offering or marketing material relating to the offering, the company, the units have been or will be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the offer of units will not be supervised by, the Swiss Financial Market Supervisory Authority FINMA (FINMA), and the offer of units has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes (“CISA”). The investor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of units.
NOTICE TO PROSPECTIVE INVESTORS IN THE DUBAI INTERNATIONAL FINANCIAL CENTRE
This prospectus relates to an Exempt Offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority (“DFSA”). This prospectus is intended for distribution only to persons of a type specified in the Offered Securities Rules of the DFSA. It must not be delivered to, or relied on by, any other person. The DFSA has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The DFSA has not approved this prospectus nor taken steps to verify the information set forth herein and has no responsibility for the prospectus. The units to which this prospectus relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the units offered should conduct their own due diligence on the units. If you do not understand the contents of this prospectus you should consult an authorized financial advisor.
Conflicts of Interest
Canadian purchasers are hereby notified that Cowen and Company, LLC and Craig-Hallum Capital Group LLC are relying on the exemption set out in section 3A.3 or 3A.4, if applicable, of National Instrument 33-105 — Underwriting Conflicts from having to provide certain conflict of interest disclosure in this document.
Statutory Rights of Action
Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if the prospectus (including any amendment thereto) such as this
document contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser of these securities in Canada should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for particulars of these rights or consult with a legal advisor.
Enforcement of Legal Rights
All of our directors and officers as well as the experts named herein may be located outside of Canada and, as a result, it may not be possible for Canadian purchasers to effect service of process within Canada upon us or those persons. All or a substantial portion of our assets and the assets of those persons may be located outside of Canada and, as a result, it may not be possible to satisfy a judgment against us or those persons in Canada or to enforce a judgment obtained in Canadian courts against us or those persons outside of Canada.
Taxation and Eligibility for Investment
Canadian purchasers of units should consult their own legal and tax advisors with respect to the tax consequences of an investment in the units in their particular circumstances and about the eligibility of the units for investment by the purchaser under relevant Canadian legislation.
LEGAL MATTERS
BraunHagey & Borden LLP, San Francisco, California, is acting as counsel in connection with the registration of our securities under the Securities Act, and as such, will pass upon the validity of the securities offered in this prospectus. Certain legal matters will be passed upon on behalf of the underwriters by Greenberg Traurig, P.A., Miami, Florida.
EXPERTS
The financial statements of 890 5th Avenue Partners, Inc. for the period from September 9, 2020 (inception) through October 15, 2020 appearing in this prospectus have been audited by Marcum LLP, independent registered public accounting firm, as set forth in their report thereon (which contains an explanatory paragraph relating to substantial doubt about the ability of 890 5th Avenue Partners, Inc. to continue as a going concern, as described in Note 1 to the financial statements), appearing elsewhere in this prospectus, and are included in reliance on such report given on the authority of such firm as experts in auditing and accounting.
INTERESTS OF NAMED EXPERTS AND COUNSEL
Under Item 509 of Regulation S-K, we hereby disclose that an entity affiliated with our counsel, BraunHagey & Borden LLP, intends to subscribe for membership interest units of 200 Park Avenue Partners, LLC, our sponsor, in exchange for $103,910 (or $115,000 if the underwriters’ over-allotment option is exercised in full) in cash. The name of this entity is BHB Fund, LLC, a California limited liability company. The principal offices of this entity are located at 351 California Street, 10th Floor, San Francisco, California 94104 and its telephone number is (415) 599-0210.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the securities we are offering by this prospectus. This prospectus does not contain all of the information included in the registration statement. For further information about us and our securities, you should refer to the registration statement and the exhibits and schedules filed with the registration statement. Whenever we make reference in this prospectus to any of our contracts, agreements or other documents, the references are materially complete but may not include a description of all aspects of such contracts, agreements or other documents, and you should refer to the exhibits attached to the registration statement for copies of the actual contract, agreement or other document.
Upon completion of this offering, we will be subject to the information requirements of the Exchange Act and will file annual, quarterly and current event reports, proxy statements and other information with the SEC. You can read our SEC filings, including the registration statement, over the Internet at the SEC’s website at www.sec.gov.
890 5th Avenue Partners, Inc.
Index to Financial Statements
| |
|
|
Page
|
|
|
Audited Financial Statements of 890 5th Avenue Partners, Inc.:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-2
|
|
|
|
|
|
|
|
|
F-3
|
|
|
|
|
|
|
|
|
F-4
|
|
|
|
|
|
|
|
|
F-5
|
|
|
|
|
|
|
|
|
F-6
|
|
|
|
|
|
|
|
|
F-7
|
|
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholder and Board of Directors of
890 5th Avenue Partners, Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheet of 890 5th Avenue Partners, Inc. (the “Company”) as of October 15, 2020, the related statements of operations, changes in stockholder’s equity and cash flows for the period from September 9, 2020 (inception) through October 15, 2020, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of October 15, 2020 and the results of its operations and its cash flows for the period from September 9, 2020 (inception) through October 15, 2020, in conformity with accounting principles generally accepted in the United States of America.
Explanatory Paragraph — Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company’s ability to execute its business plan is dependent upon its completion of the proposed initial public offering described in Note 3 to the financial statements. The Company has a working capital deficiency as of October 15, 2020 and lacks the financial resources it needs to sustain operations for a reasonable period of time, which is considered to be one year from the issuance date of the financial statements. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans with regard to these matters are also described in Notes 1 and 3. The financial statements do not include any adjustments that might become necessary should the Company be unable to continue as a going concern.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ Marcum llp
Marcum llp
We have served as the Company’s auditor since 2020.
New York, NY
November 3, 2020
890 5TH AVENUE PARTNERS, INC.
BALANCE SHEET
OCTOBER 15, 2020
| |
Assets:
|
|
|
|
|
|
|
|
| |
Current assets:
|
|
|
|
|
|
|
|
| |
Cash
|
|
|
|
$ |
25,000 |
|
|
| |
Total current assets
|
|
|
|
|
25,000 |
|
|
| |
Deferred offering costs associated with proposed public offering
|
|
|
|
|
114,592 |
|
|
| |
Total Assets
|
|
|
|
$ |
139,592 |
|
|
| |
Liabilities and Stockholder’s Equity:
|
|
|
|
|
|
|
|
| |
Current liabilities:
|
|
|
|
|
|
|
|
| |
Accrued expenses
|
|
|
|
$ |
4,167 |
|
|
| |
Accounts payable
|
|
|
|
|
120,447 |
|
|
| |
Total current liabilities
|
|
|
|
|
124,614 |
|
|
| |
Commitments and Contingencies
|
|
|
|
|
|
|
|
| |
Stockholder’s Equity:
|
|
|
|
|
|
|
|
| |
Common stock, $0.0001 par value; 10,000,000 shares authorized; 7,187,500 shares issued and outstanding(1)
|
|
|
|
|
719 |
|
|
| |
Additional paid-in capital
|
|
|
|
|
24,281 |
|
|
| |
Accumulated deficit
|
|
|
|
|
(10,022) |
|
|
| |
Total stockholder’s equity
|
|
|
|
|
14,978 |
|
|
| |
Total Liabilities and Stockholder’s Equity
|
|
|
|
$ |
139,592 |
|
|
(1)
This number includes up to 937,500 shares of common stock subject to forfeiture if the over-allotment option is not exercised in full or in part by the underwriters (see Note 5).
The accompanying notes are an integral part of these financial statements.
890 5TH AVENUE PARTNERS, INC.
STATEMENT OF OPERATIONS
For the period from September 9, 2020 (inception) through October 15, 2020
| |
General and administrative expenses
|
|
|
|
$ |
10,022 |
|
|
| |
Net loss
|
|
|
|
$ |
(10,022) |
|
|
| |
Weighted average shares outstanding, basic and diluted(1)
|
|
|
|
|
6,250,000 |
|
|
| |
Basic and diluted net loss per share
|
|
|
|
$ |
(0.00) |
|
|
(1)
This number excludes an aggregate of up to 937,500 common stock subject to forfeiture if the over-allotment option is not exercised in full or in part by the underwriters (see Note 5).
The accompanying notes are an integral part of these financial statements.
890 5TH AVENUE PARTNERS, INC.
STATEMENT OF CHANGES IN STOCKHOLDER’S EQUITY
For the period from September 9, 2020 (inception) through October 15, 2020
| |
|
|
Common Stock
|
|
|
Additional Paid-In
Capital
|
|
|
Accumulated
Deficit
|
|
|
Total
Stockholder’s
Equity
|
|
|
|
|
| |
|
|
Shares
|
|
|
Amount
|
|
|
|
|
|
|
|
|
|
|
|
Balance – September 9, 2020 (inception)
|
|
|
|
|
— |
|
|
|
|
$ |
— |
|
|
|
|
$ |
— |
|
|
|
|
$ |
— |
|
|
|
|
$ |
— |
|
|
|
|
|
|
Issuance of common stock to Sponsor(1)
|
|
|
|
|
7,187,500 |
|
|
|
|
|
719 |
|
|
|
|
|
24,281 |
|
|
|
|
|
— |
|
|
|
|
|
25,000 |
|
|
|
|
|
|
Net loss
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
(10,022) |
|
|
|
|
|
(10,022) |
|
|
|
|
|
|
Balance – October 15, 2020
|
|
|
|
|
7,187,500 |
|
|
|
|
$ |
719 |
|
|
|
|
$ |
24,281 |
|
|
|
|
$ |
(10,022) |
|
|
|
|
$ |
14,978 |
|
|
|
|
|
(1)
This number includes up to 937,500 shares of common stock subject to forfeiture if the over-allotment option is not exercised in full or in part by the underwriters (see Note 5).
The accompanying notes are an integral part of these financial statements.
890 5TH AVENUE PARTNERS, INC.
STATEMENT OF CASH FLOWS
For the period from September 9, 2020 (inception) through October 15, 2020
| |
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
|
| |
Net loss
|
|
|
|
$ |
(10,022) |
|
|
| |
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
| |
Accounts payable
|
|
|
|
|
10,022 |
|
|
| |
Net cash used in operating activities
|
|
|
|
|
— |
|
|
| |
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
| |
Proceeds from issuance of common stock to Sponsor
|
|
|
|
|
25,000 |
|
|
| |
Net cash provided by financing activities
|
|
|
|
|
25,000 |
|
|
| |
Net increase in cash
|
|
|
|
|
25,000 |
|
|
| |
Cash – beginning of the period
|
|
|
|
|
—
|
|
|
| |
Cash – end of the period
|
|
|
|
$ |
25,000 |
|
|
| |
Supplemental disclosure of noncash activities:
|
|
|
|
|
|
|
|
| |
Deferred offering costs included in accrued expenses
|
|
|
|
$ |
4,167 |
|
|
| |
Deferred offering costs included in accounts payable
|
|
|
|
$ |
110,425 |
|
|
The accompanying notes are an integral part of these financial statements.
890 5TH AVENUE PARTNERS, INC.
NOTES TO FINANCIAL STATEMENTS
Note 1 — Description of Organization, Business Operations and Basis of Presentation
890 5th Avenue Partners, Inc. (the “Company”) is a blank check company incorporated in Delaware on September 9, 2020. The Company was formed 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”). The Company is an emerging growth company and, as such, the Company is subject to all of the risks associated with emerging growth companies.
As of October 15, 2020, the Company had not commenced any operations. All activity for the period from September 9, 2020 (inception) through October 15, 2020 relates to the Company’s formation and the proposed initial public offering described below. The Company had minimal activities for the period from September 9, 2020 (inception) through October 15, 2020. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income on cash and cash equivalents from the proceeds derived from the Proposed Public Offering (as defined below). The Company has selected December 31 as its fiscal year end.
The Company’s sponsor is 200 Park Avenue Partners, LLC, a Delaware limited liability company (the “Sponsor”). The Company’s ability to commence operations is contingent upon obtaining adequate financial resources through a proposed public offering (the “Proposed Public Offering”) of 25,000,000 units (each, a “Unit” and collectively, the “Units”) at $10.00 per Unit (or 28,750,000 units if the underwriters’ over-allotment option is exercised in full), which is discussed in Note 3, and the sale of 702,500 units (or 777,500 units if the underwriters’ over-allotment option is exercised in full) (each, a “Private Placement Unit” and collectively, the “Private Placement Units”), at a price of $10.00 per Private Placement Unit in a private placement to the Sponsor, PA 2 Co-Investment LLC (an affiliate of Cowen and Company, LLC, a representative of the underwriters) and Craig-Hallum Capital Group LLC (a representative of the underwriters) and certain of its affiliates that will close simultaneously with the Proposed Public Offering.
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Proposed Public Offering and the sale of Private Placement Units, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete one or more initial Business Combinations having an aggregate fair market value of at least 80% of the net assets held in the Trust Account (as defined below) (excluding taxes payable on the income earned on the trust account) at the time of signing a definitive agreement in connection with the initial Business Combination. However, the Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act 1940, as amended (the “Investment Company Act”). Upon the closing of the Proposed Public Offering, management will agree that an amount equal to at least $10.00 per Unit sold in the Proposed Public Offering, including the proceeds from the sale of the Private Placement Units to the Sponsor, PA 2 Co-Investment LLC and Craig-Hallum Capital Group LLC, will be held in a trust account (“Trust Account”) located in the United States with Continental Stock Transfer & Trust Company acting as trustee, and invested only in U.S. “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account as described below.
The Company will provide the holders (the “Public Stockholders”) of the Company’s outstanding shares of Class A common stock, par value $0.0001 per share, sold in the Proposed Public Offering (the “Public Shares”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek
890 5TH AVENUE PARTNERS, INC.
NOTES TO FINANCIAL STATEMENTS
stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The Public Stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then held in the Trust Account (initially anticipated to be $10.00 per Public Share). These Public Shares will be recorded at a redemption value and classified as temporary equity upon the completion of the Proposed Public Offering in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” The Company will proceed with a Business Combination if a majority of the shares voted are voted in favor of the Business Combination. The Company will not redeem the Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001. If a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote for business or other legal reasons, the Company will, pursuant to its Certificate of Incorporation (the “Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by law, or the Company decides to obtain stockholder approval for business or legal reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. Additionally, each public stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction. If the Company seeks stockholder approval in connection with a Business Combination, the initial stockholders (as defined below) will agree to vote their Founder Shares (as defined below in Note 5) and any Public Shares purchased during or after the Proposed Public Offering in favor of a Business Combination. In addition, the initial stockholders will agree to waive their redemption rights with respect to their Founder Shares and Public Shares in connection with the completion of a Business Combination.
The Certificate of Incorporation will provide that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% or more of the Public Shares, without the prior consent of the Company.
The holders of the Founder Shares (as defined in Note 5) prior to the Proposed Public Offering (the “initial stockholders”) will agree not to propose an amendment to the Certificate of Incorporation to modify the substance or timing of the Company’s obligation to redeem 100% of the Public Shares if the Company does not complete a Business Combination within the Combination Period (as defined below) or with respect to any other material provisions relating to stockholders’ rights or pre-initial Business Combination activity, unless the Company provides the Public Stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.
If the Company is unable to complete a Business Combination within 24 months from the closing of the Proposed Public Offering (the “Combination Period”), the Company will (i) cease all operations except for the purpose of winding up; (2) as promptly as reasonably possible but not more than 10 business days thereafter, 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 the Company to pay its franchise and income taxes (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 liquidating distributions, if any), subject to applicable law; and (3) as promptly as reasonably possible following such redemption, subject to the approval of the remaining stockholders and the board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
The initial stockholders will agree to waive their rights to liquidating distributions from the Trust Account with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the initial stockholders acquire Public Shares in or after the
890 5TH AVENUE PARTNERS, INC.
NOTES TO FINANCIAL STATEMENTS
Proposed Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if the Company fails to complete a Business Combination within the Combination Period.
In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be only $10.00. In order to protect the amounts held in the Trust Account, the Sponsor will agree to be liable to the Company if and to the extent any claims by a third party (except for the Company’s independent registered public accounting firm) for services rendered or products sold to the Company, or a prospective target business with which the Company has entered into a letter of intent, confidentiality or other similar agreement or business combination agreement (a “Target”), reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00 per Public Share and (ii) 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 Public Share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or Target that 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 the Company’s indemnity of the underwriters of the Proposed Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers, prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
Basis of Presentation
The accompanying financial statements are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the SEC.
Emerging Growth Company
The Company 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 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, 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 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. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
890 5TH AVENUE PARTNERS, INC.
NOTES TO FINANCIAL STATEMENTS
Going Concern Consideration
As of October 15, 2020, the Company had $25,000 in cash and a working capital deficiency of approximately $100,000. Further, the Company has incurred and expects to continue to incur significant costs in pursuit of its financing and acquisition plans. Management’s plans to address this need for capital through the Proposed Public Offering. The Company cannot assure that its plans to raise capital or to consummate an initial Business Combination will be successful. In addition, management is currently evaluating the impact of the COVID-19 pandemic on the industry and its effect on the Company’s financial position, results its operations and/or search for a target company.
These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern for the twelve months following the issuance of these financial statements. The financial statements do not include any adjustments that might result from its inability to consummate the Proposed Public Offering or its inability to continue as a going concern.
Note 2 — Summary of Significant Accounting Policies
Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company had no cash equivalents as of October 15, 2020.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage limit of $250,000. At October 15, 2020, the Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under FASB ASC 820, “Fair Value Measurements,” approximates the carrying amounts represented in the balance sheet.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
Deferred Offering Costs Associated with the Proposed Public Offering
Deferred offering costs consist of legal, accounting, underwriting fees and other costs incurred through the balance sheet date that were directly related to the Proposed Public Offering and that will be charged to stockholder’s equity upon the completion of the Proposed Public Offering. Should the Proposed Public Offering prove to be unsuccessful, these deferred costs, as well as additional expenses to be incurred, will be charged to operations.
Net Loss Per Common Share
The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” Net loss per share is computed by dividing net loss by the weighted average number
890 5TH AVENUE PARTNERS, INC.
NOTES TO FINANCIAL STATEMENTS
of shares of common stock outstanding during the period excluding common stock subject to forfeiture. Weighted average shares were reduced for the effect of an aggregate of 937,500 shares of common stock that are subject to forfeiture if the overallotment option is not exercised by the underwriters (Note 6). At October 15, 2020, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into shares of common stock and then share in the earnings of the Company. As a result, diluted loss per share is the same as basic loss per share for the period presented.
Income Taxes
The Company follows the asset and liability method of accounting for income taxes under FASB ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. Deferred tax assets were deemed immaterial as of October 15, 2020.
FASB ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of October 15, 2020. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties as of October 15, 2020. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.
The provision for income taxes was deemed to be de minimis for the period from September 9, 2020 (inception) through October 15, 2020.
Recent Accounting Standards
The Company’s management does not believe that any recently issued, but not yet effective, accounting standards updates, if currently adopted, would have a material effect on the accompanying financial statements.
Note 3 — Proposed Public Offering
Pursuant to the Proposed Public Offering, the Company intends to offer for sale 25,000,000 units at a price of $10.00 per Unit. Each Unit consists of one share of Class A common stock, and one-third of one redeemable warrant (each, a “Public Warrant”). Each Public Warrant entitles the holder to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment (see Note 7).
The Company will grant the underwriters a 45-day option from the date of the final prospectus relating to the Proposed Public Offering to purchase up to 3,750,000 additional Units to cover over-allotments, if any, at the Proposed Public Offering price, less underwriting discounts and commissions.
Note 4 — Private Placement
The Sponsor, PA 2 Co-Investment LLC and Craig-Hallum Capital Group LLC will agree to purchase an aggregate of 702,500 Private Placement Units (or 777,500 Private Placement Units if the underwriters’ overallotment option is exercised in full), at a price of $10.00 per Private Placement Unit (approximately $7.0 million in the aggregate, or approximately $7.8 million if the underwriters’ over-allotment option is
890 5TH AVENUE PARTNERS, INC.
NOTES TO FINANCIAL STATEMENTS
exercised in full) in a private placement that will occur simultaneously with the closing of the Proposed Public Offering. The Private Placement Units (including the Private Placement Shares, the Private Placement Warrants (as defined below) and shares of Class A common stock issuable upon exercise of such warrants) will not be transferable or salable until 30 days after the completion of the initial Business Combination.
Each whole private placement warrant underlying the Private Placement Units (the “Private Placement Warrants”) is exercisable for one whole share of Class A common stock at a price of $11.50 per share. A portion of the proceeds from the Private Placement Units will be added to the proceeds from the Proposed Public Offering to be held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the Private Placement Units and the underlying securities will expire worthless.
The Sponsor and the Company’s officers and directors will agree, subject to limited exceptions, not to transfer, assign or sell any of their Private Placement Units until 30 days after the completion of the initial Business Combination.
Note 5 — Related Party Transactions
Founder Shares
During the period ended October 15, 2020, the Sponsor purchased 7,187,500 shares of the Company’s common stock, par value $0.0001 per share, (the “Founder Shares”) for an aggregate price of $25,000. The Company intends to amend its Certificate of Incorporation to designate the current outstanding common stock into Class F common stock. The initial stockholders have agreed to forfeit up to 937,500 Founder Shares to the extent that the over-allotment option is not exercised in full by the underwriters. The forfeiture will be adjusted to the extent that the over-allotment option is not exercised in full by the underwriters so that the Founder Shares will represent 20% of the Company’s issued and outstanding shares after the Proposed Public Offering (excluding the Private Placement Shares and assuming the initial stockholders do not purchase any Units in the Proposed Public Offering). If the Company increases or decreases the size of the offering, the Company will effect a stock dividend or share contribution back to capital, as applicable, immediately prior to the consummation of the Proposed Public Offering in such amount as to maintain the Founder Share ownership of the Company’s stockholders prior to the Proposed Public Offering at 20% of the Company’s issued and outstanding common stock upon the consummation of the Proposed Public Offering (excluding the Private Placement Shares and assuming the initial stockholders do not purchase any Units in the Proposed Public Offering).
The initial stockholders will agree, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier to occur of: (A) one year after the completion of the initial Business Combination or (B) subsequent to the initial Business Combination, (x) if the last reported sale price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the initial Business Combination, or (y) the date following the completion of the initial Business Combination on which the Company completes a liquidation, merger, stock exchange, reorganization or other similar transaction that results in all of the stockholders having the right to exchange their shares of Class A common stock for cash, securities or other property.
Related Party Loans
On October 15, 2020, the Sponsor agreed to loan the Company an aggregate of up to $300,000 to cover expenses related to the Proposed Public Offering pursuant to a promissory note (the “Note”). This loan is non-interest bearing and payable upon the earlier of September 30, 2021 or the completion of the Proposed Public Offering. As of October 15, 2020, the Company had not borrowed any amount under the Note.
890 5TH AVENUE PARTNERS, INC.
NOTES TO FINANCIAL STATEMENTS
In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination or, at the lender’s discretion, up to $1.5 million of such Working Capital Loans may be convertible into units of the post-Business Combination entity at a price of $10.00 per unit at the option of the lender. The units would be identical to the Private Placement Units. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. To date, the Company had no borrowings under the Working Capital Loans.
Note 6 — Commitments and Contingencies
Registration Rights
The holders of Founder Shares, Private Placement Units and units that may be issued upon conversion of Working Capital Loans (and any Class A common stock issuable upon the exercise of the Private Placement Units and units that may be issued upon conversion of Working Capital Loans and upon conversion of the Founder Shares) will be entitled to registration rights pursuant to a registration rights agreement to be signed prior to the consummation of the Proposed Public Offering. These holders are entitled to make up to certain demands, excluding short form demands, that we register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of the initial Business Combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The underwriters will be entitled to an underwriting discount of $0.20 per unit, or $5.0 million in the aggregate (or approximately $5.8 million in the aggregate if the underwriters’ over-allotment option is exercised in full), payable upon the closing of the Proposed Public Offering.
Business Combination Marketing Agreement
Prior to the closing of the Proposed Public Offering, the Company will engage certain underwriters in connection with the Business Combination to assist the Company in holding meetings with the stockholders to discuss the potential Business Combination and the target business’ attributes, introduce the Company to potential investors that are interested in purchasing the Company’s securities in connection with the initial Business Combination, assist the Company in obtaining stockholder approval for the Business Combination and assist the Company with its press releases and public filings in connection with the Business Combination. The scope of engagement excludes identifying and/or evaluating possible acquisition candidates. Pursuant to the agreement with underwriters, the marketing fee payable to the underwriters will be 3.5% of the gross proceeds of the Proposed Public Offering, or approximately $8.8 million in the aggregate (or approximately $10.1 million in the aggregate if the underwriters’ over-allotment option is exercised in full).
Indication of Interest
A certain qualified institutional buyer (the “Anchor Investor”) has expressed to the Company an interest to purchase up to 1,300,000 Units in the Proposed Public Offering. The Anchor Investor anticipates subscribing for membership interests in the Sponsor representing an indirect beneficial interest in up to
890 5TH AVENUE PARTNERS, INC.
NOTES TO FINANCIAL STATEMENTS
184,890 founder shares and 25,977 Private Placement Units (or up to 212,621 Founder Shares and 28,750 Private Placement Units if the underwriters’ over-allotment option is exercised in full).
The price paid by the Anchor Investor for the aforementioned indirect ownership of the Founder Shares and Private Placement Units is the same, proportionally, as that paid by the other members of the Sponsor, collectively, for the rest of such membership interests (excluding interests held directly by members of the management, directors and advisors outside of their interests in the Sponsor).
There can be no assurance that the anchor investor will acquire any units in this offering, or as to the amount of such units the anchor investor will retain, if any, prior to or upon the consummation of our initial business combination. In the event that the anchor investor purchases such units (either in this offering or after), it has agreed to vote any shares that it holds (including any public shares that it holds) in favor of our initial business combination, and a smaller portion of affirmative votes from other public shareholders would be required to approve our initial business combination. As a result of the private placement units that our anchor investor holds, it may have different interests with respect to a vote on an initial business combination than other public stockholders.
The Anchor Investor will not have any rights to the funds held in the Trust Account beyond the rights afforded to the Public Stockholders, as described herein.
Note 7 — Stockholder’s Equity
Common Stock — The Company is authorized to issue 10,000,000 shares of common stock with a par value of $0.0001 per share. On October 15, 2020, the Company issued 7,187,500 shares of common stock, including an aggregate of up to 937,500 shares of common stock that are subject to forfeiture, to the Company by the initial stockholders for no consideration to the extent that the underwriter’s over-allotment option is not exercised in full or in part, so that the initial stockholders will collectively own 20% of the Company’s issued and outstanding common stock after the Proposed Public Offering (excluding the Private Placement Shares and assuming the initial stockholders do not purchase any Units in the Proposed Public Offering).
The Company intends to amend its Certificate of Incorporation to allow authorization to issue 500,000,000 shares of Class A common stock, $0.0001 par value, 25,000,000 shares of Class F common stock, $0.0001 par value, and 5,000,000 shares of undesignated preferred stock, $0.0001 par value, and designate the current outstanding common stock into Class F common stock.
Holders of the Class A common stock and holders of the Class F common stock of record are entitled to one vote for each share held on all matters to be voted on by stockholders, including any vote in connection with our initial business combination, and vote together as a single class, except as required by law.
The Class F common stock will automatically convert into Class A common stock at the time of the initial Business Combination, or earlier at the option of the holder, on a one-for-one basis, subject to increase in respect of the issuance of certain securities, as provided herein. In the case that additional shares of Class A common stock, or equity-linked securities (as described herein), are issued or deemed issued in excess of the amounts sold in the Proposed Public Offering and related to the closing of the initial Business Combination, the ratio at which shares of Class F common stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding shares of Class F common stock agree to waive such adjustment with respect to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares of Class F common stock will equal, in the aggregate, 20% of the aggregate number of all shares of common stock outstanding upon the completion of the Proposed Public Offering, plus the aggregate number of shares of Class A common stock and equity-linked securities issued or deemed issued in connection with the initial Business Combination (net of the number of shares of Class A common stock redeemed in connection with the initial Business Combination), excluding any shares or equity-linked securities issued, or to be issued, to any seller in the initial Business Combination.
890 5TH AVENUE PARTNERS, INC.
NOTES TO FINANCIAL STATEMENTS
Warrants — Public Warrants may only be exercised for a whole number of shares. No fractional Public Warrants will be issued upon separation of the Units and only whole Public Warrants will trade. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination or (b) 12 months from the closing of the Proposed Public Offering; provided in each case that the Company has an effective registration statement under the Securities Act covering the shares of Class A common stock issuable upon exercise of the Public Warrants and a current prospectus relating to them is available (or the Company permits holders to exercise their Public Warrants on a cashless basis and such cashless exercise is exempt from registration under the Securities Act). The Company will agree that as soon as practicable, but in no event later than 15 business days after the closing of the initial Business Combination, the Company will use its commercially reasonable efforts to file with the SEC and have an effective registration statement covering the shares of the Class A common stock issuable upon exercise of the warrants and to maintain a current prospectus relating to those shares of the Class A common stock until the warrants expire or are redeemed, as specified in the warrant agreement. If a registration statement covering the shares of the Class A common stock issuable upon exercise of the warrants is not effective by the 60th business day after the closing of the initial Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption.
The warrants have an exercise price of $11.50 per whole share, subject to adjustments, and will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation. In addition, if (x) the Company issues additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of the initial Business Combination, at an issue price or effective issue price of less than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by the board of directors and, in the case of any such issuance to the initial stockholders or their respective affiliates, without taking into account any Founder Shares or Private Placement Shares held by them prior to such issuance), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of the initial Business Combination, and (z) the volume weighted average trading price of the Class A common stock during the 10 trading day period starting on the trading day after the day on which the Company consummates its initial Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the Market Value, and the $18.00 per share redemption trigger price described below will be adjusted (to the nearest cent) to be equal to 180% of the Market Value.
The Private Placement Warrants are identical to the Public Warrants, except that the Private Placement Warrants and the shares of Class A common stock issuable upon exercise of the Private Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants will be non-redeemable so long as they are held by the Sponsor or its permitted transferees. If the Private Placement Warrants are held by someone other than the Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
Redemptions of warrants when the price of Class A common stock equals or exceeds $18.00. Once the warrants become exercisable, the Company may redeem the outstanding warrants (except as described herein with respect to the Private Placement Warrants):
•
in whole and not in part;
•
at a price of $0.01 per warrant;
•
upon a minimum of 30 days’ prior written notice of redemption; and
•
if, and only if, the last reported sale price of Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like and
890 5TH AVENUE PARTNERS, INC.
NOTES TO FINANCIAL STATEMENTS
for certain issuances of Class A common stock and equity-linked securities as described above) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders.
The Company will not redeem the warrants unless a registration statement under the Securities Act covering the issuance of the shares of Class A common stock issuable upon exercise of the warrants is then effective and a current prospectus relating to those shares of common stock is available throughout the 30-day redemption period, except if the warrants may be exercised on a cashless basis and such cashless exercise is exempt from registration under the Securities Act. If and when the warrants become redeemable by the Company, it may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws.
If the Company calls the warrants for redemption as described above, the management will have the option to require all holders that wish to exercise warrants to do so on a “cashless basis.”
In no event will the Company be required to net cash settle any warrant. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.
Redemption of warrants when the price per share of Class common stock equals or exceeds $10.00 — Commencing ninety days after the warrants become exercisable, the Company may redeem the outstanding Public Warrants:
•
in whole and not in part;
•
at a price of $0.10 per warrant provided that holders will be able to exercise their warrants prior to redemption and receive that number of shares of Class A common stock determined based on the redemption date and the “fair market value” of the Company’s Class A common stock;
•
upon a minimum of 30 days’ prior written notice of redemption;
•
if, and only if, the last reported sale price of the Company’s Class A common stock equals or exceeds $10.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) on the trading day prior to the date on which the Company sends the notice of redemption to the warrant holders;
•
if, and only if, there is an effective registration statement covering the issuance of the shares of Class A common stock issuable upon exercise of the warrants and a current prospectus relating thereto is available throughout the 30-day period after the written notice of redemption is given.
Note 8 — Subsequent Events
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were issued. Based on this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.
25,000,000 Units
890 5th Avenue Partners, Inc.
Preliminary Prospectus
Joint Book-Running Managers
| |
Cowen
|
|
|
Craig-Hallum Capital Group
|
|
Until , 2021, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to unsold allotments or subscriptions.
Part II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The estimated expenses payable by us in connection with the offering described in this registration statement (other than the underwriting discount and commissions) will be as follows:
| |
Legal fees and expenses
|
|
|
|
$ |
225,000 |
|
|
| |
Printing and engraving expenses
|
|
|
|
|
25,000 |
|
|
| |
Accounting fees and expenses
|
|
|
|
|
52,000 |
|
|
| |
SEC expenses
|
|
|
|
|
31,366 |
|
|
| |
FINRA expenses
|
|
|
|
|
43,625 |
|
|
| |
Nasdaq application and filing fees(1)
|
|
|
|
|
63,000 |
|
|
| |
Directors and officers insurance premiums(2)
|
|
|
|
|
500,000 |
|
|
| |
Miscellaneous expenses
|
|
|
|
|
60,009 |
|
|
| |
Total
|
|
|
|
$ |
1,000,000 |
|
|
(1)
Includes application fee and annual fee for 2021. Does not include $70,000 Nasdaq initial listing fee, which fee Nasdaq has agreed to defer until 2022.
(2)
This amount represents the approximate amount of annual director and officer liability insurance premiums the registrant anticipates paying following the completion of its initial public offering and until it completes a business combination.
Item 14. Indemnification of Directors and Officers.
Our amended and restated certificate of incorporation will provide that all of our directors, officers, employees and agents shall be entitled to be indemnified by us to the fullest extent permitted by Section 145 of the Delaware General Corporation Law (“DGCL”). Section 145 of the Delaware General Corporation Law concerning indemnification of officers, directors, employees and agents is set forth below.
Section 145. Indemnification of officers, directors, employees and agents; insurance.
(a)
A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit or proceeding if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person’s conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that the person’s conduct was unlawful.
(b)
A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by the person in connection with the defense or settlement of such action or suit if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.
(c)
To the extent that a present or former director or officer of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections (a) and (b) of this section, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith.
(d)
Any indemnification under subsections (a) and (b) of this section (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the present or former director, officer, employee or agent is proper in the circumstances because the person has met the applicable standard of conduct set forth in subsections (a) and (b) of this section. Such determination shall be made, with respect to a person who is a director or officer at the time of such determination, (1) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (2) by a committee of such directors designated by majority vote of such directors, even though less than a quorum, or (3) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (4) by the stockholders.
(e)
Expenses (including attorneys’ fees) incurred by an officer or director in defending any civil, criminal, administrative or investigative action, suit or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the corporation as authorized in this section. Such expenses (including attorneys’ fees) incurred by former officers and directors or other employees and agents may be so paid upon such terms and conditions, if any, as the corporation deems appropriate.
(f)
The indemnification and advancement of expenses provided by, or granted pursuant to, the other subsections of this section shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding such office. A right to indemnification or to advancement of expenses arising under a provision of the certificate of incorporation or a bylaw shall not be eliminated or impaired by an amendment to such provision after the occurrence of the act or omission that is the subject of the civil, criminal, administrative or investigative action, suit or proceeding for which indemnification or advancement of expenses is sought, unless the provision in effect at the time of such act or omission explicitly authorizes such elimination or impairment after such action or omission has occurred.
(g)
A corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the corporation would have the power to indemnify such person against such liability under this section.
(h)
For purposes of this section, references to “the corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under this section with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued.
(i)
For purposes of this section, references to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on a person with respect to any employee benefit plan; and references to “serving at the request of the corporation” shall include any service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the corporation” as referred to in this section.
(j)
The indemnification and advancement of expenses provided by, or granted pursuant to, this section shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.
(k)
The Court of Chancery is hereby vested with exclusive jurisdiction to hear and determine all actions for advancement of expenses or indemnification brought under this section or under any by law, agreement, vote of stockholders or disinterested directors, or otherwise. The Court of Chancery may summarily determine a corporation’s obligation to advance expenses (including attorneys’ fees).
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers, and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment of expenses incurred or paid by a director, officer or controlling person in a successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to the court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
In accordance with Section 102(b)(7) of the DGCL, our amended and restated certificate of incorporation, will provide that no director shall be personally liable to us or any of our stockholders for monetary damages resulting from breaches of their fiduciary duty as directors, except to the extent such limitation on or exemption from liability is not permitted under the DGCL. The effect of this provision of our amended and restated certificate of incorporation is to eliminate our rights and those of our stockholders (through stockholders’ derivative suits on our behalf) to recover monetary damages against a director for breach of the fiduciary duty of care as a director, including breaches resulting from negligent or grossly negligent behavior, except, as restricted by Section 102(b)(7) of the DGCL. However, this provision does not limit or eliminate our rights or the rights of any stockholder to seek non-monetary relief, such as an injunction or rescission, in the event of a breach of a director’s duty of care.
If the DGCL is amended to authorize corporate action further eliminating or limiting the liability of directors, then, in accordance with our amended and restated certificate of incorporation, the liability of our directors to us or our stockholders will be eliminated or limited to the fullest extent authorized by the
DGCL, as so amended. Any repeal or amendment of provisions of our amended and restated certificate of incorporation limiting or eliminating the liability of directors, whether by our stockholders or by changes in law, or the adoption of any other provisions inconsistent therewith, will (unless otherwise required by law) be prospective only, except to the extent such amendment or change in law permits us to further limit or eliminate the liability of directors on a retroactive basis.
Our amended and restated certificate of incorporation will also provide that we will, to the fullest extent authorized or permitted by applicable law, indemnify our current and former officers and directors, as well as those persons who, while directors or officers of our corporation, are or were serving as directors, officers, employees or agents of another entity, trust or other enterprise, including service with respect to an employee benefit plan, in connection with any threatened, pending or completed proceeding, whether civil, criminal, administrative or investigative, against all expense, liability and loss (including, without limitation, attorney’s fees, judgments, fines, ERISA excise taxes and penalties and amounts paid in settlement) reasonably incurred or suffered by any such person in connection with any such proceeding. Notwithstanding the foregoing, a person eligible for indemnification pursuant to our amended and restated certificate of incorporation will be indemnified by us in connection with a proceeding initiated by such person only if such proceeding was authorized by our board of directors, except for proceedings to enforce rights to indemnification.
The right to indemnification which will be conferred by our amended and restated certificate of incorporation is a contract right that includes the right to be paid by us the expenses incurred in defending or otherwise participating in any proceeding referenced above in advance of its final disposition, provided, however, that if the DGCL requires, an advancement of expenses incurred by our officer or director (solely in the capacity as an officer or director of our corporation) will be made only upon delivery to us of an undertaking, by or on behalf of such officer or director, to repay all amounts so advanced if it is ultimately determined that such person is not entitled to be indemnified for such expenses under our amended and restated certificate of incorporation or otherwise.
The rights to indemnification and advancement of expenses will not be deemed exclusive of any other rights which any person covered by our amended and restated certificate of incorporation may have or hereafter acquire under law, our amended and restated certificate of incorporation, our bylaws, an agreement, vote of stockholders or disinterested directors, or otherwise.
Any repeal or amendment of provisions of our amended and restated certificate of incorporation affecting indemnification rights, whether by our stockholders or by changes in law, or the adoption of any other provisions inconsistent therewith, will (unless otherwise required by law) be prospective only, except to the extent such amendment or change in law permits us to provide broader indemnification rights on a retroactive basis, and will not in any way diminish or adversely affect any right or protection existing at the time of such repeal or amendment or adoption of such inconsistent provision with respect to any act or omission occurring prior to such repeal or amendment or adoption of such inconsistent provision. Our amended and restated certificate of incorporation will also permit us, to the extent and in the manner authorized or permitted by law, to indemnify and to advance expenses to persons other that those specifically covered by our amended and restated certificate of incorporation.
Our bylaws, which we intend to adopt immediately prior to the effectiveness of the registration statement of which this prospectus forms a part, include the provisions relating to advancement of expenses and indemnification rights consistent with those which will be set forth in our amended and restated certificate of incorporation. In addition, our bylaws provide for a right of indemnity to bring a suit in the event a claim for indemnification or advancement of expenses is not paid in full by us within a specified period of time. Our bylaws also permit us to purchase and maintain insurance, at our expense, to protect us and/or any director, officer, employee or agent of our corporation or another entity, trust or other enterprise against any expense, liability or loss, whether or not we would have the power to indemnify such person against such expense, liability or loss under the DGCL.
Any repeal or amendment of provisions of our bylaws affecting indemnification rights, whether by our board of directors, stockholders or by changes in applicable law, or the adoption of any other provisions inconsistent therewith, will (unless otherwise required by law) be prospective only, except to the extent such amendment or change in law permits us to provide broader indemnification rights on a retroactive basis,
and will not in any way diminish or adversely affect any right or protection existing thereunder with respect to any act or omission occurring prior to such repeal or amendment or adoption of such inconsistent provision.
We will enter into indemnity agreements with each of our officers and directors a form of which is filed as Exhibit 10.7 to this Registration Statement. These agreements will require us to indemnify these individuals to the fullest extent permitted under Delaware law against liabilities that may arise by reason of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified.
Pursuant to the Underwriting Agreement filed as Exhibit 1.1 to this Registration Statement, we have agreed to indemnify the underwriters and the underwriters have agreed to indemnify us against certain civil liabilities that may be incurred in connection with this offering, including certain liabilities under the Securities Act.
Item 15. Recent Sales of Unregistered Securities.
On October 15, 2020, 200 Park Avenue Partners, LLC, our sponsor, purchased an aggregate of 7,187,500 founder shares for an aggregate purchase price of $25,000, or approximately $0.003 per share. In December 2020, our sponsor sold 621,222 founder shares to PA 2 Co-Investment, and in January 2021 sold an aggregate of 266,238 founder shares to Craig-Hallum and certain of its affiliates and an aggregate of 105,000 founder shares to our independent director nominees (20,000 shares to each of Ms. Yaccarino and Messrs. Flanders, Bank and Jashni, and 25,000 to Ms. Turner), in each case at their original per share purchase price. If the over-allotment option is not fully exercised, our sponsor may forfeit up to 821,741 founder shares, PA 2 Co- Investment may forfeit up to 81,030 founder shares and Craig- Hallum and certain of its affiliates may forfeit up to 34,729 founder shares.
The number of founder shares issued was determined based on the expectation that the founder shares would represent 20% of the outstanding common stock upon completion of this offering (excluding any private placement securities which may be owned by or deemed to be beneficially owned by our initial stockholders or any securities issued upon conversion of working capital loans). Such securities were issued in connection with our organization pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act. Our founders are accredited investors for purposes of Rule 501 of Regulation D.
In addition, our sponsor founders have committed, pursuant to a written agreement, to purchase from us an aggregate of 702,500 (or 777,500 if the underwriters’ over-allotment option is exercised in full) private placement units at $10.00 per private placement unit (for an aggregate purchase price of $7,025,000 or $7,775,000 if the underwriters’ over-allotment option is exercised in full). These private placement units consist of one private placement share of Class A common stock and one-third of one private placement warrant to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment as provided herein. This purchase will take place on a private placement basis simultaneously with the completion of our initial public offering. This issuance will be made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.
No underwriting discounts or commissions were paid with respect to such sales.
Item 16. Exhibits and Financial Statement Schedules.
(a)
Exhibits. The list of exhibits following the signature page of this registration statement is incorporated herein by reference.
(b)
Financial Statements. See page F-1 for an index to the financial statements and schedules included in the registration statement.
Item 17. Undertakings.
(a)
The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreements, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.
(b)
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
(c)
The undersigned registrant hereby undertakes that:
(1)
For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
(2)
For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3)
For the purpose of determining liability under the Securities Act to any purchaser, if the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
(4)
For the purpose of determining liability of a registrant under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of an undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i)
Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
(ii)
Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by an undersigned registrant;
(iii)
The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
(iv)
Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
Exhibit Index
|
Exhibit
|
|
|
Description
|
|
| |
|
1.1 |
* |
|
|
|
Form of Underwriting Agreement
|
|
| |
|
1.2 |
** |
|
|
|
Form of Business Combination Marketing Agreement
|
|
| |
|
3.1 |
** |
|
|
|
Certificate of Incorporation
|
|
| |
|
3.2 |
** |
|
|
|
Form of Amended and Restated Certificate of Incorporation
|
|
| |
|
3.3 |
** |
|
|
|
Amended and Restated Bylaws
|
|
| |
|
4.1 |
* |
|
|
|
Specimen Unit Certificate
|
|
| |
|
4.2 |
** |
|
|
|
Specimen Class A Common Stock Certificate
|
|
| |
|
4.3 |
* |
|
|
|
Specimen Warrant Certificate (included in Exhibit 4.4)
|
|
| |
|
4.4 |
* |
|
|
|
Form of Warrant Agreement between Continental Stock Transfer & Trust Company and the Registrant
|
|
| |
|
5.1 |
* |
|
|
|
Opinion of BraunHagey & Borden LLP
|
|
| |
|
10.1 |
** |
|
|
|
Promissory Note, dated October 15, 2020, issued to 200 Park Avenue Partners, LLC
|
|
| |
|
10.2 |
* |
|
|
|
Form of Letter Agreement among the Registrant and our officers, directors, officer and director
nominees, PA 2 Co-Investment LLC, Craig-Hallum Capital Group LLC and 200 Park Avenue
Partners, LLC
|
|
| |
|
10.3 |
* |
|
|
|
Form of Investment Management Trust Agreement between Continental Stock Transfer & Trust
Company and the Registrant
|
|
| |
|
10.4 |
* |
|
|
|
Form of Registration Rights Agreement between the Registrant and certain security holders
|
|
| |
|
10.5 |
** |
|
|
|
Securities Subscription Agreement, dated October 15, 2020, between the Registrant and 200 Park Avenue Partners, LLC
|
|
| |
|
10.6 |
* |
|
|
|
Form of Private Placement Unit Purchase Agreement between the Registrant and PA 2 Co-Investment LLC
|
|
| |
|
10.7 |
** |
|
|
|
Form of Indemnity Agreement
|
|
| |
|
10.8 |
** |
|
|
|
Form of Administrative Services Agreement between the Registrant and 200 Park Avenue Partners, LLC
|
|
| |
|
10.9 |
* |
|
|
|
Form of Private Placement Unit Purchase Agreement between the Registrant and Craig-Hallum
Capital Group LLC and its affiliates
|
|
| |
|
10.10 |
* |
|
|
|
Form of Private Placement Unit Purchase Agreement between the Registrant and 200 Park Avenue Partners, LLC
|
|
| |
|
14 |
** |
|
|
|
Form of Code of Ethics
|
|
| |
|
23.1 |
* |
|
|
|
Consent of Marcum LLP
|
|
| |
|
23.2 |
* |
|
|
|
Consent of BraunHagey & Borden LLP (included in Exhibit 5.1)
|
|
| |
|
24 |
** |
|
|
|
Power of Attorney (included on signature page of the initial Registration Statement)
|
|
| |
|
99.1 |
** |
|
|
|
Form of Audit Committee Charter
|
|
| |
|
99.2 |
** |
|
|
|
Form of Compensation Committee Charter
|
|
| |
|
99.3 |
** |
|
|
|
Consent of Linda Yaccarino, Director Nominee
|
|
| |
|
99.4 |
** |
|
|
|
Consent of Kelli Turner, Director Nominee
|
|
| |
|
99.5 |
** |
|
|
|
Consent of David Bank, Director Nominee
|
|
| |
|
99.6 |
** |
|
|
|
Consent of Scott Flanders, Director Nominee
|
|
| |
|
99.7 |
** |
|
|
|
Consent of Jon Jashni, Director Nominee
|
|
| |
|
99.8 |
** |
|
|
|
Consent of Michael Del Nin, Executive Officer Nominee
|
|
*
Filed herewith
**
Previously filed
Signatures
Pursuant to the requirements of the Securities Act of 1933 the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York on January 11, 2021.
890 5TH AVENUE PARTNERS, INC.
By:
/s/ Adam Rothstein
Name: Adam Rothstein
Title:
Executive Chairman
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
| |
Signature
|
|
|
Title
|
|
|
Date
|
|
| |
/s/ Adam Rothstein
Adam Rothstein
|
|
|
Executive Chairman and Director (Principal Financial and Accounting Officer)
|
|
|
January 11, 2021
|
|
| |
*
Emiliano Calemzuk
|
|
|
Chief Executive Officer and Director (Principal Executive Officer)
|
|
|
January 11, 2021
|
|
| |
*By:
/s/ Adam Rothstein
Adam Rothstein
Attorney-in-Fact
|
|
|
|
|
|
|
|
Exhibit 1.1
890 5th Avenue Partners, Inc.
25,000,000 Units
Underwriting Agreement
January [__], 2021
Cowen and Company, LLC
Craig-Hallum Capital Group LLC
As Representatives of the several Underwriters listed in Schedule 1 hereto
c/o Cowen and Company, LLC
599 Lexington Avenue
New York, New York 10022
c/o Craig-Hallum Capital Group LLC
222 South 9th Street, Suite 350
Minneapolis, Minnesota 55402
Ladies and Gentlemen:
890 5th Avenue Partners,
Inc., a Delaware corporation (the “Company”), proposes to issue and sell to the several underwriters listed
in Schedule 1 hereto (collectively, the “Underwriters”), for whom you are acting as representatives (the “Representatives”),
an aggregate of 25,000,000 units of the Company (the “Underwritten Units”) and, at the option of the Underwriters,
up to an additional 3,750,000 units of the Company (the “Option Units”). The Underwritten Units and the Option
Units are herein referred to as the “Public Units.”
Each Unit consists
of one share of the Company’s Class A common stock, par value $0.0001 per share (the “Common Stock”),
and one-third of one redeemable warrant, where each whole warrant entitles the holder to purchase one share of Common Stock (the
“Public Warrants”). The shares of Common Stock and the Public Warrants included in the Public Units will not
trade separately until the 52nd day following the date of the Prospectus (as defined below) (or if such date is not a business
day (as defined below), the following business day) (unless the Representatives inform the Company of their decision to allow earlier
separate trading), subject to (a) the Company’s preparation of an audited balance sheet reflecting the receipt by the
Company of the proceeds of the Offering (as defined below), (b) the filing of such audited balance sheet with the U.S. Securities
and Exchange Commission (the “Commission”) on a Current Report on Form 8-K or similar form by the Company
that includes such audited balance sheet and (c) the Company having issued a press release announcing when such separate trading
will begin. No fractional Public Warrants will be issued upon separation of the Public Units, and only whole Public Warrants will
trade. Each whole Public Warrant entitles its holder, upon exercise, to purchase one share of Common Stock at a price of $11.50
per share during the period commencing on the later of thirty days after the completion of the Company’s initial Business
Combination (as defined below) and twelve months from the date of the Closing Date, and terminating on the five-year anniversary
of the date of the completion of such initial Business Combination or earlier upon redemption or Liquidation (as defined below);
provided, however, that pursuant to the Warrant Agreement (as defined below), a fractional Public Warrant may not
be exercised, so that only a whole Public Warrant may be exercised at any given time by a holder thereof. As used herein, the term
“Business Combination” (as described more fully in the Prospectus) shall mean a merger, capital stock exchange,
asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses involving the Company.
The Company has entered
into an Investment Management Trust Agreement, effective as of the date hereof (the “Trust Agreement”), with
Continental Stock Transfer & Trust Company (“CST”), as trustee (the “Trustee”), in substantially
the form filed as Exhibit 10.3 to the Registration Statement (as defined below), pursuant to which proceeds from the sale of the
Private Placement Units (as defined below) and proceeds from the Offering will be deposited and held in a trust account (the “Trust
Account”) for the benefit of the Company, the Underwriters and the Public Stockholders (as defined below).
The Company has entered
into a Warrant Agreement, effective as of the date hereof (the “Warrant Agreement”), with respect to the Warrants
and the Private Placement Warrants (as defined below) with CST, as warrant agent, in substantially the form filed as Exhibit 4.4
to the Registration Statement, pursuant to which CST will act as warrant agent in connection with the issuance, registration, transfer,
exchange, redemption, and exercise of the Public Warrants and the Private Placement Warrants.
Effective as of October
15, 2020, the Company entered into (i) a Securities Subscription Agreement (the “Sponsor Purchase Agreement”)
with 200 Park Avenue Partners, LLC, a Delaware limited liability company (the “Sponsor”), in substantially
the form filed as Exhibit 10.5 to the Registration Statement, pursuant to which the Sponsor purchased an aggregate of 7,187,500
shares of common stock, par value $0.0001, which shares have been reclassified on a 1-to-1 basis into shares of Class F common
stock, par value $0.0001 (the “Founder Shares”), for an aggregate purchase price of $25,000, or approximately
$0.003 per share. On December 11, 2020, pursuant to a certain securities purchase agreement (the “PA 2 Purchase Agreement”),
the Sponsor sold 621,222 Founder Shares to PA 2 Co-Investment LLC (“PA 2 Co-Investment”), and on January 7,
2021, pursuant to certain securities purchase agreements (the “CH Purchase Agreements” and together with the
PA 2 Purchase Agreement and the Sponsor Purchase Agreement, the “Founder Purchase Agreements”), the Sponsor
sold an aggregate of 266,238 Founder Shares to Craig-Hallum Capital Group LLC and certain of its affiliates (in such capacity,
the “CH Founder Share Subscribers”). Depending on the extent to which the Underwriters’ over-allotment
option is exercised, up to 821,741 of the Sponsor’s Founder Shares, up to 81,030 of PA 2 Co-Investment’s Founder Shares
and up to 34,729 of the CH Founder Share Subscribers’ Founder Shares, or a total of 937,500 Founder Shares, are subject
to forfeiture. The Founder Shares are substantially similar to the shares of Common Stock included in the Public Units, except
as described in the Registration Statement, the Pricing Disclosure Package (as defined below) and the Prospectus.
Effective as of October
15, 2020, the Company issued a Promissory Note (the “Sponsor Promissory Note”) in favor of the Sponsor, in substantially
the form filed as Exhibit 10.1 to the Registration Statement, under which the Company may borrow up to a principal amount of $300,000.
The Sponsor Promissory Note is unsecured and non-interest-bearing.
Effective as of
the date hereof, the Company has entered into a Private Placement Unit Purchase Agreement (collectively, the “Unit
Purchase Agreements”) with each of the Sponsor (the “Sponsor Unit Purchase Agreement”),
PA-2 Co-Investment (the “PA 2 Unit Purchase Agreement”) and each of the CH Founder Share Subscribers
(collectively, the “CH Unit Purchase Agreements”), in substantially the forms filed as Exhibits 10.10,
10.6 and 10.9 to the Registration Statement, respectively, pursuant to which the Sponsor, PA-2 Co-Investment and the CH
Founder Share Subscribers agreed to purchase an aggregate of 702,500 units (or up to 777,500 units depending on the extent to
which the Underwriters’ over-allotment option is exercised), consisting of 594,076 units (or up to 657,500 units
depending on the extent to which the over-allotment option is exercised) to be purchased by the Sponsor, 75,897 units (or up
to 84,000 units depending on the extent to which the Underwriters’ over-allotment option is exercised) to be purchased
by PA-2 Co-Investment and 32,527 units (or up to 36,000 units depending on the extent to which the Underwriters’
over-allotment option is exercised) to be purchased by CH Founder Share Subscribers, each such unit consisting of one share
of Common Stock (the “Private Placement Shares”) and one-third of one warrant to purchase one share of
Common Stock at an exercise price of $11.50 per share (the “Private Placement Units” and, together with
the Public Units, the “Units”). The warrants included in the Private Placement Units are referred to
herein as the “Private Placement Warrants” and, collectively with the Public Warrants, the
“Warrants.” The Private Placement Units and Private Placement Warrants are substantially similar to the
Public Units and Public Warrants, respectively, except as described in the Registration Statement, the Pricing Disclosure
Package and the Prospectus.
The Company has entered
into a Registration Rights Agreement, effective as of the date hereof (the “Registration Rights Agreement”),
with the Sponsor and the other parties thereto, in substantially the form filed as Exhibit 10.4 to the Registration Statement,
pursuant to which the Company has granted certain registration rights in respect of the Private Placement Units, the Private Placement
Shares, the Private Placement Warrants and the shares of Common Stock underlying the Private Placement Warrants, the Founder Shares
and certain warrants (which will be substantially similar to the Private Placement Warrants), if any, that may be issued upon the
conversion of working capital loans and the shares of Common Stock underlying such warrants, if any.
The Company has caused
to be duly executed and delivered a letter agreement, effective as of the date hereof (the “Insider Letter”),
by the Company on the one hand and the Sponsor, PA-2 Co-Investment, the CH Founder Share Subscribers and each of the Company’s
officers, directors and director nominees on the other hand, in substantially the form filed as Exhibit 10.2 to the Registration
Statement.
The Company has entered
into an Administrative Services Agreement, effective as of the date hereof (the “Administrative Services Agreement”),
with the Sponsor, in substantially the form filed as Exhibit 10.8 to the Registration Statement, pursuant to which the Company
will, subject to the terms of the Administrative Services Agreement, pay to the Sponsor an aggregate monthly fee of $20,000 for
office space, utilities, general office and secretarial support, and administrative and support services from the Closing Date
until the earlier of (x) the consummation of an initial Business Combination and (y) the Liquidation.
The Company has entered
into a Business Combination Marketing Agreement, effective as of the date hereof, with the Underwriters (the “Business
Combination Marketing Agreement” and, together with this Agreement (as defined below), the Trust Agreement, the Warrant
Agreement, the Founder Purchase Agreements, the Sponsor Promissory Note, the Unit Purchase Agreements, the Registration Rights
Agreement, the Insider Letter and the Administrative Services Agreement, the “Transaction Documents”), in substantially
the form filed as Exhibit 1.2 to the Registration Statement.
The Company hereby
confirms its agreement with the several Underwriters concerning the purchase and sale of the Public Units, as follows:
1.
Registration Statement. The Company has prepared and filed with the Commission under the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder (collectively, the “Securities Act”),
a registration statement (File No. 333-251650), including a prospectus, relating to the Public Units and the Public Warrants
and shares of Common Stock included therein. Such registration statement, as amended at the time it became effective, including
the information, if any, deemed pursuant to Rule 430A, 430B or 430C under the Securities Act to be part of the registration statement
at the time of its effectiveness (“Rule 430 Information”), is referred to herein as the “Registration
Statement”; and as used herein, the term “Preliminary Prospectus” means each prospectus included in
such registration statement (and any amendments thereto) before effectiveness, any prospectus filed with the Commission pursuant
to Rule 424(a) under the Securities Act and the prospectus included in the Registration Statement at the time of its effectiveness
that omits Rule 430 Information, and the term “Prospectus” means the prospectus in the form first used (or made
available upon request of purchasers pursuant to Rule 173 under the Securities Act) in connection with confirmation of sales
of the Public Units. If the Company has filed an abbreviated registration statement pursuant to Rule 462(b) under the Securities
Act (the “Rule 462 Registration Statement”), then any reference herein to the term “Registration Statement”
shall be deemed to include such Rule 462 Registration Statement.
At or prior to the
Applicable Time (as defined below), the Company had prepared the following information (collectively with the pricing information
set forth on Annex A, the “Pricing Disclosure Package”): a Preliminary Prospectus dated [__], 20[20][21].
“Applicable
Time” means [[_] A/P.M.], New York City time, on January [__], 2021.
2.
Purchase of the Public Units.
(a)
The Company agrees to issue and sell the Underwritten Units to the several Underwriters as provided in this underwriting
agreement (this “Agreement”), and each Underwriter, on the basis of the representations, warranties and agreements
set forth herein and subject to the conditions set forth herein, agrees, severally and not jointly, to purchase at a price per
Public Unit of $9.80 (the “Purchase Price”) from the Company the respective number of Underwritten Units set
forth opposite such Underwriter’s name in Schedule 1 hereto.
(b)
In addition, the Company agrees to issue and sell the Option Units to the several Underwriters as provided in this Agreement,
and the Underwriters, on the basis of the representations, warranties and agreements set forth herein and subject to the conditions
set forth herein, shall have the option to purchase, severally and not jointly, from the Company the Option Units at a price per
Unit of $9.80 less an amount per unit equal to any dividends or distributions declared by the Company and payable on the Underwritten
Units but not payable on the Option Units.
If any Option Units
are to be purchased, the number of Option Units to be purchased by each Underwriter shall be the number of Option Units which bears
the same ratio to the aggregate number of Option Units being purchased as the number of Underwritten Units set forth opposite the
name of such Underwriter in Schedule 1 hereto (or such number increased as set forth in Section 10 hereof) bears to
the aggregate number of Underwritten Units being purchased from the Company by the several Underwriters, subject, however, to such
adjustments to eliminate any fractional Public Units as the Representatives in their sole discretion shall make.
The Underwriters may
exercise the option to purchase Option Units at any time in whole, or from time to time in part, on or before the forty-fifth day
following the date of the Prospectus, by written notice from the Representatives to the Company. Such notice shall set forth the
aggregate number of Option Units as to which the option is being exercised and the date and time when the Option Units are to be
delivered and paid for, which may be the same date and time as the Closing Date (as defined below) but shall not be earlier than
the Closing Date nor later than the tenth full business day after the date of such notice (unless such time and date are postponed
in accordance with the provisions of Section 10 hereof). Any such notice shall be given at least one business day prior
to the date and time of delivery specified therein.
(c)
The Company understands that the Underwriters intend to make a public offering of the Public Units (the “Offering”),
and initially to offer the Public Units on the terms set forth in the Pricing Disclosure Package. The Company acknowledges and
agrees that the Underwriters may offer and sell Public Units to or through any affiliate of an Underwriter.
(d)
Payment for the Public Units shall be made by wire transfer in immediately available funds to the account specified by the
Company to the Representatives in the case of the Underwritten Units, at the offices of Greenberg Traurig, P.A. at 333 S.E. 2nd
Avenue, Miami, FL, 33131 at 10:00 A.M. New York City time on January [__], 2021, or at such other time or place on the same or
such other date, not later than the fifth business day thereafter, as the Representatives and the Company may agree upon in writing
or, in the case of the Option Units, on the date and at the time and place specified by the Representatives in the written notice
of the Underwriters’ election to purchase such Option Units. The Company shall not be obligated to sell or deliver any of
the Underwritten Units, except upon tender of payment by the Representatives for all Underwritten Units. The time and date of such
payment for the Underwritten Units is referred to herein as the “Closing Date,” and each time and date for such
payment for Option Units, if other than the Closing Date, is herein referred to as an “Additional Closing Date.”
Payment for the Public
Units to be purchased on the Closing Date or the Additional Closing Date, as the case may be, shall be made against delivery to
the Representatives for the respective accounts of the several Underwriters of the Public Units to be purchased on such date in
definitive or book-entry form registered in such names and in such denominations as the Representatives shall request in writing
not later than two full business days prior to the Closing Date or the Additional Closing Date, as the case may be, with any transfer
taxes payable in connection with the sale of such Public Units duly paid by the Company. Delivery of the Public Units shall be
made through the facilities of The Depository Trust Company unless the Representatives shall otherwise instruct.
(e)
The Company acknowledges and agrees that the Representatives and the other Underwriters are acting solely in the capacity
of an arm’s length contractual counterparty to the Company with respect to the Offering contemplated hereby (including in
connection with determining the terms of the Offering) and not as a financial advisor or a fiduciary to, or an agent of, the Company
or any other person. Additionally, neither the Representatives nor any other Underwriter is advising the Company or any other person
as to any legal, tax, investment, accounting or regulatory matters in any jurisdiction. The Company shall consult with its own
advisors concerning such matters and shall be responsible for making its own independent investigation and appraisal of the transactions
contemplated hereby, and neither the Representatives nor the other Underwriters shall have any responsibility or liability to the
Company with respect thereto. Any review by the Representatives and the other Underwriters of the Company, the transactions contemplated
hereby or other matters relating to such transactions will be performed solely for the benefit of the Underwriters and shall not
be on behalf of the Company.
3.
Representations and Warranties of the Company. The Company represents and warrants to each Underwriter that:
(a)
Preliminary Prospectus. No order preventing or suspending the use of any Preliminary Prospectus has been issued by the
Commission, and each Preliminary Prospectus included in the Pricing Disclosure Package, at the time of filing thereof, complied
in all material respects with the Securities Act, and no Preliminary Prospectus, at the time of filing thereof, contained any untrue
statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided that the Company makes no representation or warranty
with respect to any statements or omissions made in reliance upon and in conformity with information relating to any Underwriter
furnished to the Company in writing by such Underwriter through the Representatives expressly for use in any Preliminary Prospectus,
it being understood and agreed that the only such information furnished by any Underwriter consists of the information described
as such in Section 7(b) hereof.
(b)
Pricing Disclosure Package. The Pricing Disclosure Package as of the Applicable Time did not, and as of the Closing
Date and as of the Additional Closing Date, as the case may be, will not, contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided that the Company makes no representation or warranty with respect to any statements
or omissions made in reliance upon and in conformity with information relating to any Underwriter furnished to the Company in writing
by such Underwriter through the Representatives expressly for use in such Pricing Disclosure Package, it being understood and agreed
that the only such information furnished by any Underwriter consists of the information described as such in Section 7(b)
hereof. No statement of material fact included in the Prospectus has been omitted from the Pricing Disclosure Package and no statement
of material fact included in the Pricing Disclosure Package that is required to be included in the Prospectus has been omitted
therefrom.
(c)
Issuer Free Writing Prospectus. Other than the Registration Statement, the Preliminary Prospectus and the Prospectus,
the Company (including its agents and representatives, other than the Underwriters in their capacity as such) has not prepared,
made, used, authorized, approved or referred to and will not prepare, make, use, authorize, approve or refer to any “written
communication” (as defined in Rule 405 under the Securities Act) that constitutes an offer to sell or solicitation of an
offer to buy the Units other than any document not constituting a prospectus pursuant to Section 2(a)(10)(a) of the Securities
Act or Rule 134 under the Securities Act.
(d)
Form 8-A. The Company has filed with the Commission a Form 8-A (file number 001-[_____]) providing for the registration
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), of the Public Units, the Common
Stock and the Public Warrants, which registration is currently effective on the date hereof. The Public Units and the shares of
Common Stock and the Public Warrants included as part of the Public Units have been authorized for listing, subject to official
notice of issuance and evidence of satisfactory distribution, on the Exchange, and the Company knows of no reason or set of facts
that is likely to adversely affect such authorization.
(e)
Emerging Growth Company. From the time of the initial confidential submission of the Registration Statement to the Commission
(or, if earlier, the first date on which the Company engaged directly or through any person authorized to act on its behalf in
any Testing-the-Waters Communication) through the date hereof, the Company has been and is an “emerging growth company,”
as defined in Section 2(a) of the Securities Act (an “Emerging Growth Company”). “Testing-the-Waters
Communication” means any oral or written communication with potential investors undertaken in reliance on Section 5(d)
of the Securities Act or Rule 163B under the Securities Act.
(f)
Testing-the-Waters Materials. The Company (i) has not alone engaged in any Testing-the-Waters Communications other than
Testing-the-Waters Communications with the consent of the Representatives with entities that are qualified institutional buyers
within the meaning of Rule 144A under the Securities Act or institutions that are accredited investors within the meaning of Rule
501 under the Securities Act and (ii) has not authorized anyone other than the Representatives to engage in Testing-the-Waters
Communications. The Company reconfirms that the Representatives have been authorized to act on its behalf in undertaking Testing-the-Waters
Communications. The Company has not distributed or approved for distribution any Written Testing-the-Waters Communications other
than those listed on Annex B hereto. “Written Testing-the-Waters Communication” means any Testing-the-Waters
Communication that is a written communication within the meaning of Rule 405 under the Securities Act. Any individual Written Testing-the-Waters
Communication does not conflict with the information contained in the Registration Statement or the Pricing Disclosure Package,
complied in all material respects with the Securities Act, and when taken together with the Pricing Disclosure Package as of the
Applicable Time, did not, and as of the Closing Date and as of the Additional Closing Date, as the case may be, will not, contain
any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
(g)
Registration Statement and Prospectus. The Registration Statement has been declared effective by the Commission. No
order suspending the effectiveness of the Registration Statement has been issued by the Commission, and no proceeding for that
purpose or pursuant to Section 8A of the Securities Act against the Company or related to the Offering has been initiated
or threatened by the Commission; as of the applicable effective date of the Registration Statement and any post-effective amendment
thereto, the Registration Statement and any such post-effective amendment complied and will comply in all material respects with
the Securities Act, and did not and will not contain any untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements therein not misleading; and as of the date of the Prospectus
and any amendment or supplement thereto and as of the Closing Date and as of the Additional Closing Date, as the case may be, the
Prospectus will comply in all material respects with the Securities Act and will not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided that the Company makes no representation or warranty with respect to any
statements or omissions made in reliance upon and in conformity with information relating to any Underwriter furnished to the Company
in writing by such Underwriter through the Representatives expressly for use in the Registration Statement and the Prospectus and
any amendment or supplement thereto, it being understood and agreed that the only such information furnished by any Underwriter
consists of the information described as such in Section 7(b) hereof.
(h)
Financial Statements. The financial statements (including the related notes thereto) of the Company included in the
Registration Statement, the Pricing Disclosure Package and the Prospectus comply in all material respects with the applicable requirements
of the Securities Act and present fairly the financial position of the Company as of the dates indicated and the results of their
operations and the changes in their cash flows for the periods specified; such financial statements have been prepared in conformity
with generally accepted accounting principles (“GAAP”) in the United States applied on a consistent basis throughout
the periods covered thereby, and any supporting schedules included in the Registration Statement present fairly the information
required to be stated therein; and the other financial information included in the Registration Statement, the Pricing Disclosure
Package and the Prospectus has been derived from the accounting records of the Company and presents fairly the information shown
thereby; all disclosures included in the Registration Statement, the Pricing Disclosure Package and the Prospectus regarding “non-GAAP
financial measures” (as such term is defined by the rules and regulations of Commission), if any, comply with Regulation
G of the Exchange Act and Item 10 of Regulation S-K of the Securities Act, to the extent applicable.
(i)
No Material Adverse Change. Since the date of the most recent financial statements of the Company included in the Registration
Statement, the Pricing Disclosure Package and the Prospectus, (i) there has not been any change in the capital stock, short-term
debt or long-term debt of the Company, or any dividend or distribution of any kind declared, set aside for payment, paid or made
by the Company on any class of capital stock, or any material adverse change, or any development involving a prospective material
adverse change, in or affecting the business, properties, management, financial position, stockholders’ equity, results of
operations or prospects of the Company; (ii) the Company has not entered into any transaction or agreement (whether or not in the
ordinary course of business) that is material to the Company or incurred any liability or obligation, direct or contingent, that
is material to the Company; and (iii) the Company has not sustained any loss or interference with its business that is material
to the Company and that is either from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any
labor disturbance or dispute or any action, order or decree of any court or arbitrator or governmental or regulatory authority,
except in each case as otherwise disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus.
(j)
Organization and Good Standing. The Company has been duly organized and is validly existing and in good standing under
the laws of its jurisdiction of organization, is duly qualified to do business and is in good standing in each jurisdiction in
which its ownership or lease of property or the conduct of its business requires such qualification, and has all power and authority
necessary to own or hold its properties and to conduct the business in which it is engaged, except where the failure to be so qualified
or in good standing or have such power or authority would not, individually or in the aggregate, have a material adverse effect
on the business, properties, management, financial position, stockholders’ equity, results of operations or prospects of
the Company or on the performance by the Company of its obligations under the Transaction Documents (a “Material Adverse
Effect”).
(k)
Capitalization. The Company has an authorized capitalization as set forth in the Registration Statement, the Pricing
Disclosure Package and the Prospectus under the heading “Capitalization”; all the outstanding shares of capital stock
of the Company have been duly and validly authorized and issued and are fully paid and non-assessable and are not subject to any
pre-emptive or similar rights; except as described in or expressly contemplated by the Registration Statement, the Pricing Disclosure
Package and the Prospectus, there are no outstanding rights (including, without limitation, pre-emptive rights), warrants or options
to acquire, or instruments convertible into or exchangeable for, any shares of capital stock or other equity interest in the Company
or any contract, commitment, agreement, understanding or arrangement of any kind relating to the issuance of any capital stock
of the Company, any such convertible or exchangeable securities or any such rights, warrants or options; the capital stock of the
Company conforms in all material respects to the description thereof contained in the Registration Statement, the Pricing Disclosure
Package and the Prospectus. The offers and sales of the outstanding securities of the Company were at all relevant times either
registered under the Securities Act, the applicable state securities and blue sky laws or, based in part on the representations
and warranties of the purchasers of such securities, exempt from such registration requirements.
(l)
Due Authorization. The Company has full right, power and authority to execute and deliver this Agreement and each of
the other Transaction Documents and to perform its obligations hereunder and thereunder; and all action required to be taken for
the due and proper authorization, execution and delivery by it of this Agreement and each of the other Transaction Documents and
the consummation by it of the transactions contemplated hereby and thereby has been duly and validly taken.
(m)
The Underwriting Agreement. This Agreement has been duly authorized, executed and delivered by the Company.
(n)
The Offering Securities. The Units have been duly and validly authorized and, when issued and delivered against payment
therefor as provided herein or in the Unit Purchase Agreements, as applicable, will be duly and validly issued, will be free of
statutory and contractual preemptive rights, resale rights, rights of first refusal or similar rights, will conform to the descriptions
thereof in the Registration Statement, the Pricing Disclosure Package and the Prospectus, and will constitute valid and binding
obligations of the Company, enforceable against the Company in accordance with their terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency, or similar laws affecting creditors’ rights generally from time to time in effect
and by equitable principles of general applicability. The specimen certificates for the Public Units are in due and proper form.
The shares of Common Stock included in the Units have been duly and validly authorized and, when issued and delivered against payment
therefor as provided herein or in the Unit Purchase Agreements, as applicable, will be duly and validly issued, fully paid and
non-assessable and free of statutory and contractual preemptive rights, resale rights, rights of first refusal and similar rights.
The Warrants, when executed, authenticated, issued and delivered in the manner set forth in the Warrant Agreement against payment
therefor as provided herein or in the Unit Purchase Agreements, as applicable, will be duly executed, authenticated, issued and
delivered and will constitute valid and binding obligations of the Company, enforceable against the Company in accordance with
their terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, or similar laws affecting creditors’
rights generally from time to time in effect and by equitable principles of general applicability. The shares of Common Stock issuable
upon exercise of the Warrants have been duly authorized and reserved for issuance upon exercise of the Warrants and, when issued
and delivered against payment therefor pursuant to the Warrant Agreement, will be duly and validly issued, fully paid and non-assessable;
the holders of such Common Stock are not and will not be subject to personal liability by reason of being such holders; such shares
of Common Stock are not and will not be subject to any statutory and contractual preemptive rights, resale rights, rights of first
refusal and similar rights; and all corporate action required to be taken for the authorization, issuance and delivery of such
Common Stock (other than the issuance and delivery to be made upon exercise of the Warrants and payment therefor pursuant to the
Warrant Agreement) has been duly and validly taken.
(o)
The Trust Agreement. The Trust Agreement has been duly authorized, executed and delivered by the Company and constitutes
a valid and legally binding obligation of the Company enforceable against the Company in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally
or by equitable principles relating to enforceability.
(p)
The Warrant Agreement. The Warrant Agreement has been duly authorized, executed and delivered by the Company and constitutes
a valid and legally binding obligation of the Company enforceable against the Company in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally
or by equitable principles relating to enforceability.
(q)
The Founder Purchase Agreements. The Sponsor Purchase Agreement has been duly authorized, executed and delivered by
the Company and the Sponsor and constitutes a valid and legally binding obligation of the Company and the Sponsor enforceable against
the Company and the Sponsor in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency
or similar laws affecting the enforcement of creditors’ rights generally or by equitable principles relating to enforceability.
Each of the PA 2 Purchase Agreement and the CH Purchase Agreement has been duly authorized, executed and delivered by the Company
and constitutes a valid and legally binding obligation of the Company enforceable against the Company in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors’
rights generally or by equitable principles relating to enforceability.
(r)
The Sponsor Promissory Note. The Sponsor Promissory Note has been duly authorized, executed and delivered by the Company
and constitutes a valid and legally binding obligation of the Company enforceable against the Company in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors’
rights generally or by equitable principles relating to enforceability.
(s)
The Unit Purchase Agreements. The Sponsor Unit Purchase Agreement has been duly authorized, executed and delivered by
the Company and the Sponsor and constitutes a valid and legally binding obligation of the Company and the Sponsor enforceable against
the Company and the Sponsor in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency
or similar laws affecting the enforcement of creditors’ rights generally or by equitable principles relating to enforceability.
Each of the PA 2 Unit Purchase Agreement and the CH Unit Purchase Agreements has been duly authorized, executed and delivered by
the Company and constitutes a valid and legally binding obligation of the Company enforceable against the Company in accordance
with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement
of creditors’ rights generally or by equitable principles relating to enforceability.
(t)
The Registration Rights Agreement. The Registration Rights Agreement has been duly authorized, executed and delivered
by the Company and constitutes a valid and legally binding obligation of the Company enforceable against the Company in accordance
with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement
of creditors’ rights generally or by equitable principles relating to enforceability.
(u)
The Insider Letter. Each of the Insider Letter has been duly authorized, executed and delivered by the Company and the
Sponsor and, to the Company’s knowledge, duly executed and delivered by each officer, director and director nominee of the
Company and constitutes a valid and legally binding obligation of the Company and the Sponsor and, to the Company’s knowledge,
a valid and legally binding obligation of each officer, director and director nominee of the Company, enforceable in accordance
with its terms against the Company and the Sponsor and, to the Company’s knowledge, each officer, director and director nominee
of the Company, except as enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement
of creditors’ rights generally or by equitable principles relating to enforceability.
(v)
The Administrative Services Agreement. The Administrative Services Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and legally binding obligation of the Company enforceable against the Company
in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting
the enforcement of creditors’ rights generally or by equitable principles relating to enforceability.
(w)
The Business Combination Marketing Agreement. The Business Combination Marketing Agreement has been duly authorized,
executed and delivered by the Company and constitutes a valid and legally binding obligation of the Company enforceable against
the Company in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency or similar
laws affecting the enforcement of creditors’ rights generally or by equitable principles relating to enforceability.
(x)
Descriptions of the Transaction Documents. Each Transaction Document conforms in all material respects to the description
thereof contained in the Registration Statement, the Pricing Disclosure Package and the Prospectus.
(y)
No Violation or Default. The Company is not (i) in violation of any provision in its charter or by-laws or similar organizational
documents; (ii) in default, and no event has occurred that, with notice or lapse of time or both, would constitute such a default,
in the due performance or observance of any term, covenant or condition contained in any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company is a party or by which the Company is bound or to which any property
or asset of the Company is subject; or (iii) in violation of any law or statute or any judgment, order, rule or regulation
of any court or arbitrator or governmental or regulatory authority, except, in the case of clauses (ii) and (iii) above, for any
such default or violation that would not, individually or in the aggregate, have a Material Adverse Effect.
(z)
No Conflicts. The execution, delivery and performance by the Company of each of the Transaction Documents, the issuance
and sale of the Units and the consummation of the transactions contemplated by the Transaction Documents or the Pricing Disclosure
Package and the Prospectus will not (i) conflict with or result in a breach or violation of any of the terms or provisions of,
or constitute a default under, result in the termination, modification or acceleration of, or result in the creation or imposition
of any lien, charge or encumbrance upon any property, right or asset of the Company pursuant to, any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument to which the Company is a party or by which the Company is bound or to
which any property, right or asset of the Company is subject, (ii) result in any violation of the provisions of the charter or
by-laws or similar organizational documents of the Company or (iii) result in the violation of any law or statute or any judgment,
order, rule or regulation of any court or arbitrator or governmental or regulatory authority, except, in the case of clauses (i)
and (iii) above, for any such conflict, breach, violation, default, lien, charge or encumbrance that would not, individually or
in the aggregate, have a Material Adverse Effect.
(aa)
No Consents Required. No consent, approval, authorization, order, registration or qualification of or with any court
or arbitrator or governmental or regulatory authority is required for the execution, delivery and performance by the Company of
each of the Transaction Documents, the issuance and sale of the Units and the consummation of the transactions contemplated by
the Transaction Documents, except for the registration of the Public Units and the shares of Common Stock and the Public Warrants
under the Securities Act and such consents, approvals, authorizations, orders and registrations or qualifications as may be required
by the Financial Industry Regulatory Authority, Inc. (“FINRA”) and under applicable state securities laws in
connection with the purchase and distribution of the Public Units by the Underwriters.
(bb)
Legal Proceedings. There are no legal, governmental or regulatory investigations, actions, demands, claims, suits, arbitrations,
inquiries or proceedings (“Actions”) pending to which the Company is or may be a party or to which any property
of the Company is or may be the subject that, individually or in the aggregate, if determined adversely to the Company, could reasonably
be expected to have a Material Adverse Effect; no such Actions are threatened or, to the knowledge of the Company, contemplated
by any governmental or regulatory authority or threatened by others; and (i) there are no current or pending Actions that are required
under the Securities Act to be described in the Registration Statement, the Pricing Disclosure Package or the Prospectus that are
not so described in the Registration Statement, the Pricing Disclosure Package and the Prospectus and (ii) there are no statutes,
regulations or contracts or other documents that are required under the Securities Act to be filed as exhibits to the Registration
Statement or described in the Registration Statement, the Pricing Disclosure Package or the Prospectus that are not so filed as
exhibits to the Registration Statement or described in the Registration Statement, the Pricing Disclosure Package and the Prospectus.
(cc) Independent Accountants. Marcum LLP, who have certified certain financial statements of the Company, is an independent
registered public accounting firm with respect to the Company within the applicable rules and regulations adopted by the Commission
and the Public Company Accounting Oversight Board (United States) and as required by the Securities Act.
(dd)
Certain Disclosures. There is no franchise, contract or other document of a character required to be described in the
Registration Statement or Prospectus, or to be filed as an exhibit thereto, which is not described or filed as required (and the
Pricing Disclosure Package contains in all material respects the same description of the foregoing matters contained in the Prospectus);
and the statements in the Pricing Disclosure Package and the Prospectus under the headings “Principal Stockholders,”
“Certain Relationships and Related Party Transactions,” “Description of Securities,” “Underwriting”
and “United States Federal Income Tax Considerations” insofar as such statements summarize legal matters, agreements,
documents or proceedings discussed therein, are in all material respects accurate and fair summaries of such legal matters, agreements,
documents or proceedings. There are no business relationships or related party transactions involving the Company or any other
person required by the Securities Act to be described in the Registration Statement or Prospectus that have not been described
as required.
(ee) Investment
Company Act. The Company is not and, after giving effect to the offering and sale of the Units and the application of the
proceeds thereof as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, will not be required
to register as an “investment company” or an entity “controlled” by an “investment company”
within the meaning of the Investment Company Act of 1940, as amended, and the rules and regulations of the Commission thereunder
(collectively, the “Investment Company Act”).
(ff)
Company Taxes. The Company has paid all federal, state, local and foreign taxes and filed all tax returns required to
be paid or filed through the date hereof; and except as otherwise disclosed in each of the Registration Statement, the Pricing
Disclosure Package and the Prospectus, there is no tax deficiency that has been, or could reasonably be expected to be, asserted
against the Company or any of its properties or assets.
(gg)
Licenses and Permits. The Company possesses all licenses, sub-licenses, certificates, permits and other authorizations
issued by, and has made all declarations and filings with, the appropriate federal, state, local or foreign governmental or regulatory
authorities that are necessary for the ownership or lease of its properties or the conduct of its business as described in each
of the Registration Statement, the Pricing Disclosure Package and the Prospectus, except where the failure to possess or make the
same would not, individually or in the aggregate, have a Material Adverse Effect; and except as described in each of the Registration
Statement, the Pricing Disclosure Package and the Prospectus, the Company has not received notice of any revocation or modification
of any such license, sub-license, certificate, permit or authorization or has any reason to believe that any such license, sub-license,
certificate, permit or authorization will not be renewed in the ordinary course.
(hh)
Disclosure Controls. The Company maintains an effective system of “disclosure controls and procedures” (as
defined in Rule 13a-15(e) of the Exchange Act) that complies with the requirements of the Exchange Act to the extent required by
Rule 13a-15(e) of the Exchange Act.
(ii) Minute
Books. The minute books of the Company have been made available to the Underwriters and counsel for the Underwriters, and
such books (i) contain a complete summary of all meetings and actions of the board of directors (including each board committee)
and stockholders of the Company since the time of its incorporation through the date of the latest meeting and action and (ii)
accurately in all material respects reflect all transactions referred to in such minutes.
(jj) Cybersecurity;
Data Protection. The Company’s information technology assets and equipment, computers, systems, networks, hardware,
software, websites, applications, and databases (collectively, “IT Systems”) are adequate for, and operate
and perform in all material respects as required in connection with the operation of the business of the Company as currently
conducted, and, to the knowledge of the Company, free and clear of all material bugs, errors, defects, Trojan horses, time bombs,
malware and other corruptants. The Company has implemented and maintained commercially reasonable controls, policies, procedures,
and safeguards to maintain and protect its material confidential information and the integrity, continuous operation, redundancy
and security of all IT Systems and data (including all personal, personally identifiable, sensitive, confidential or regulated
data (“Personal Data”)) used in connection with its business, and there have been no breaches, violations,
outages or unauthorized uses of or accesses to same, except for those that have been remedied without material cost or liability
or the duty to notify any other person, nor any incidents under internal review or investigations relating to the same. The Company
is presently in material compliance with all applicable laws or statutes and all judgments, orders, rules and regulations of any
court or arbitrator or governmental or regulatory authority, internal policies and contractual obligations relating to the privacy
and security of IT Systems and Personal Data and to the protection of such IT Systems and Personal Data from unauthorized use,
access, misappropriation or modification, except where the failure to be in compliance would not, individually or in the aggregate,
have a Material Adverse Effect.
(kk)
No Unlawful Payments. Neither the Company nor, to the knowledge of the Company, any director, director nominees, officer,
officer nominees or employee of the Company nor, to the knowledge of the Company, any agent, affiliate, representative or other
person associated with or acting on behalf of the Company has (i) used any corporate funds for any unlawful contribution,
gift, entertainment or other unlawful expense relating to political activity; (ii) made or taken an act in furtherance of an offer,
promise or authorization of any direct or indirect unlawful payment or benefit to any foreign or domestic government official or
employee, including of any government-owned or controlled entity or of a public international organization, or any person acting
in an official capacity for or on behalf of any of the foregoing, or any political party or party official or candidate for political
office; (iii) violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977, as amended, or any
applicable law or regulation implementing the OECD Convention on Combating Bribery of Foreign Public Officials in International
Business Transactions, or committed an offence under the Bribery Act 2010 of the United Kingdom or any other applicable anti-bribery
or anti-corruption law; or (iv) made, offered, agreed, requested or taken an act in furtherance of any unlawful bribe or other
unlawful benefit, including, without limitation, any rebate, payoff, influence payment, kickback or other unlawful or improper
payment or benefit. The Company has instituted, maintains and enforces, and will continue to maintain and enforce policies and
procedures designed to promote and ensure compliance with all applicable anti-bribery and anti-corruption laws.
(ll)
Compliance with Anti-Money Laundering Laws. The operations of the Company are and have been conducted at all times in
compliance with applicable financial recordkeeping and reporting requirements, including those of the U.S. Bank Secrecy Act, as
amended by Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001 (USA PATRIOT Act) and the Currency and Foreign Transactions Reporting Act of 1970, as amended, the applicable
money laundering statutes of all jurisdictions where the Company conducts business, the rules and regulations thereunder and any
related or similar rules, regulations or guidelines issued, administered or enforced by any governmental agency (collectively,
the “Anti-Money Laundering Laws”) and no action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company with respect to the Anti-Money Laundering Laws is pending or, to the
knowledge of the Company, threatened.
(mm)
No Conflicts with Sanctions Laws. Neither the Company nor any of its directors, director nominees, officers, or employees,
nor, to the knowledge of the Company, any agent, affiliate, representative or other person associated with or acting on behalf
of the Company is currently the subject or the target of any sanctions administered or enforced by the U.S. government, (including,
without limitation, the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State
and including, without limitation, the designation as a “specially designated national” or “blocked person”),
the United Nations Security Council, the European Union, Her Majesty’s Treasury or other relevant sanctions authority (collectively,
“Sanctions”), nor is the Company located, organized or resident in a country or territory that is the subject
or target of Sanctions, including, without limitation, Crimea, Cuba, Iran, North Korea and Syria (each, a “Sanctioned
Country”); and the Company will not directly or indirectly use the proceeds of the Offering hereunder, or lend, contribute
or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity (i) to fund or
facilitate any activities of or business with any person that, at the time of such funding or facilitation, is the subject or target
of Sanctions, (ii) to fund or facilitate any activities of or business in any Sanctioned Country or (iii) in any other manner that
will result in a violation by any person (including any person participating in the transaction, whether as underwriter, advisor,
investor or otherwise) of Sanctions. For the past five years, the Company has not knowingly engaged in and are not now knowingly
engaged in any dealings or transactions with any person that at the time of the dealing or transaction is or was the subject or
the target of Sanctions or with any Sanctioned Country.
(nn)
No Registration Rights. No person has the right to require the Company to register any securities for sale under the
Securities Act by reason of the filing of the Registration Statement with the Commission or the issuance and sale of the Public
Units.
(oo)
Compliance with Exchange Rules. There is and has been no failure on the part of the Company or, to the knowledge of
the Company, any of the Company’s officers, directors or director nominees, in their capacities as such, to comply with (as
and when applicable), and immediately following the initial effective date of the Registration Statement the Company will be in
compliance with, the applicable requirements of the Nasdaq Listing Rules. Further, there is and has been no failure on the part
of the Company or, to the knowledge of the Company, any of the Company’s officers, directors or director nominees, in their
capacities as such, to comply with (as and when applicable), and immediately following the initial effective date of the Registration
Statement the Company will be in compliance with, the phase-in requirements and all other applicable provisions of the Exchange’s
corporate governance requirements set forth in the Nasdaq Listing Rules.
(pp)
Transfer Taxes. There are no transfer, stamp, issue, registration, documentary or other similar taxes, duties, fees
or charges under U.S. federal law or the laws of any state, or any political subdivision thereof, or under the laws of any non-U.S.
jurisdiction, required to be paid in connection with the execution and delivery of this Agreement or the issuance or sale by the
Company of the Public Units.
(qq)
Questionnaires. All information contained in the questionnaires (the “Questionnaires”) completed
by the Company and the Sponsor and provided to the Underwriters is true and correct; all information contained in the Questionnaires
completed by the Company’s officers, directors and director nominees and provided to the Underwriters is, to the knowledge
of the Company, true and correct; and the Company has not become aware of any information that would cause the information disclosed
in the Questionnaires completed by the Company, the Sponsor or the Company’s officers, directors and director nominees to
become inaccurate and incorrect.
(rr)
Acquisition Target Not Selected. Prior to the date hereof, the Company has not selected any Business Combination target
and has not, nor, to its knowledge, has anyone on its behalf, initiated any substantive discussions, directly or indirectly, with
respect to a possible initial Business Combination, or engaged or retained any agent or other representative to identify or locate
any such Business Combination candidate.
(ss) No
Broker’s Fees. Except as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus,
there are no claims, payments, arrangements, contracts, agreements or understandings relating to the payment of a brokerage commission
or finder’s, consulting, origination or similar fee by the Company, the Sponsor or any officer, director or director nominee
of the Company with respect to the sale of the Public Units hereunder or any other arrangements, agreements or understandings
of the Company, the Sponsor or any such officer, director or director nominee of the Company, or their respective affiliates,
that may affect the Underwriters’ compensation, as determined by FINRA.
(tt) Forward-Looking
Statements. No forward-looking statement (within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act) contained in either the General Disclosure Package or the Prospectus has been made or reaffirmed without a reasonable basis
or has been disclosed other than in good faith.
(uu)
No Direct or Indirect Payments. Except as described in the Registration Statement, the Pricing Disclosure Package and
the Prospectus, the Company has not made any direct or indirect payments (in cash, securities or any other type of “underwriting
compensation” as defined in Rule 5110(j)(22) of FINRA’s Conduct Rules): (i) to any person, as a finder’s
fee, consulting fee or otherwise, in consideration of such person raising capital for the Company or introducing to the Company
persons who raised or provided capital to the Company; (ii) to any person that, to the Company’s knowledge, has been accepted
by FINRA as a member of FINRA (a “Member”); or (iii) to any person or entity that, to the Company’s
knowledge, has any direct or indirect affiliation or association with any Member, within the twelve months prior to the initial
effective date of the Registration Statement, other than payments to the Underwriters pursuant to this Agreement and the Business
Combination Marketing Agreement.
(vv)
No Investment Banking, Financial Advisory and/or Consulting Services. Except as described in the Registration Statement,
the Pricing Disclosure Package and the Prospectus, during the period beginning 180 days prior to the initial confidential submission
of the Registration Statement and ending on the initial effective date of the Registration Statement, no Member and/or any person
associated or affiliated with a Member has provided any investment banking, financial advisory and/or consulting services to the
Company.
(ww)
Affiliation with FINRA. Except as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus
or as disclosed in the Questionnaires provided to the Representatives, to the Company’s knowledge, no officer, director,
director nominee or beneficial owner of any class of the Company’s securities (whether debt or equity, registered or unregistered,
regardless of the time acquired or the source from which derived) (any such individual or entity, a “Company Affiliate”)
is a Member or a person associated or affiliated with a Member.
(xx)
Ownership of FINRA Member Securities. Except as disclosed in the Questionnaires provided to the Representatives, to
the Company’s knowledge, no Company Affiliate is an owner of stock or other securities of any Member (other than securities
purchased on the open market).
(yy)
Subordinated Loans to FINRA Members. To the Company’s knowledge, no Company Affiliate has made a subordinated
loan to any Member.
(zz)
Non-Compete/Non-Solicitation. Except as described in the Pricing Disclosure Package and the Prospectus, to the Company’s
knowledge, none of the Sponsor, officers, directors or director nominees of the Company is subject to a non-competition agreement
or non-solicitation agreement with any employer, prior employer or other entity that could materially affect its, his or her ability
to be and act in the capacity of stockholder, officer or director of the Company, as applicable.
(aaa) Related
Party Transactions. No relationship, direct or indirect, exists between or among any of the Company or any affiliate of the
Company, on the one hand, and any director, director nominee, officer, stockholder, special advisor, customer or supplier of the
Company or any affiliate of the Company, on the other hand, which is required by the Securities Act or the Exchange Act to be
described in the Registration Statement, Pricing Disclosure Package or the Prospectus that is not described as required. There
are no outstanding loans, advances (except normal advances for business expenses in the ordinary course of business) or guarantees
of indebtedness by the Company to or for the benefit of any of the officers, directors or director nominees of the Company or
any of their respective family members. The Company has not extended or maintained credit, arranged for the extension of credit,
or renewed an extension of credit, in the form of a personal loan to or for any officer, director or director nominee of the Company.
(bbb)
No Unlawful Influence. The Company has not offered, or caused the Underwriters to offer, the Public Units to any person
or entity with the intention of unlawfully influencing: (a) a customer or supplier of the Company or any affiliate of the
Company to alter the customer’s or supplier’s level or type of business with the Company or such affiliate or (b) a
journalist or publication to write or publish favorable information about the Company or any such affiliate.
(ccc)
Applicability of Rule 419. Upon delivery and payment for the Public Units on the Closing Date and each Additional Closing
Date, the Company will not be subject to Rule 419 under the Securities Act and none of the Company’s outstanding securities
will be deemed to be a “penny stock” as defined in Rule 3a51-1 under the Exchange Act.
(ddd)
Absence of Manipulation. The Company has not taken, directly or indirectly, any action designed to or that would constitute
or that might reasonably be expected to cause or result in, under the Exchange Act or otherwise, stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of the Public Units.
(eee)
Margin Rules. Neither the issuance, sale and delivery of the Public Units nor the application of the proceeds thereof
by the Company as described in each of the Registration Statement, the Pricing Disclosure Package and the Prospectus will violate
Regulation T, U or X of the Board of Governors of the Federal Reserve System or any other regulation of such Board of Governors.
(fff)
Statistical and Market Data. Nothing has come to the attention of the Company that has caused the Company to believe
that the statistical and market-related data included in each of the Registration Statement, the Pricing Disclosure Package and
the Prospectus is not based on or derived from sources that are reliable and accurate in all material respects.
(ggg)
Sarbanes-Oxley Act. Solely to the extent that the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations
promulgated by the Commission thereunder (the “Sarbanes-Oxley Act”) have been applicable to the Company, there
is and has been no failure on the part of the Company or any of the Company’s directors or officers, in their capacities
as such, to comply with any provision of the Sarbanes-Oxley Act, including Section 402 related to loans and Sections 302 and 906
related to certifications.
(hhh)
Status under the Securities Act. At the time of filing the Registration Statement and any post-effective amendment thereto
the Company was an “ineligible issuer,” as defined in Rule 405 under the Securities Act solely because of subclause
(B) of clause (ii) of the definition thereof. The Company has paid the registration fee for the Offering pursuant to Rule 456 under
the Securities Act.
(iii) No
Ratings. There are (and prior to the Closing Date, will be) no debt securities, convertible securities or preferred stock
issued or guaranteed by the Company that are rated by a “nationally recognized statistical rating organization,” as
such term is defined in Section 3(a)(62) under the Exchange Act.
(jjj) Company
Ownership of Other Entities. The Company does not own, and since its incorporation has not owned, an interest in any corporation,
partnership, limited liability company, joint venture, trust or other entity.
4.
Further Agreements of the Company. The Company covenants and agrees with each Underwriter that:
(a) Required Filings. The Company will file the final Prospectus with the Commission within the time periods specified by
Rule 424(b) and Rule 430A, 430B or 430C under the Securities Act; and the Company will furnish copies of the Prospectus (to the
extent not previously delivered) to the Underwriters in New York City prior to 10:00 A.M., New York City time, on the business
day next succeeding the date of such filing in such quantities as the Representatives may reasonably request.
(b) Delivery
of Copies. The Company will deliver, upon request, without charge, (i) to the Representatives, signed copies of the Registration
Statement as originally filed and each amendment thereto, in each case including all exhibits and consents filed therewith; and
(ii) to each Underwriter (A) a conformed copy of the Registration Statement as originally filed and each amendment thereto
(without exhibits) and (B) during the Prospectus Delivery Period (as defined below), as many copies of the Prospectus (including
all amendments and supplements thereto) as the Representatives may reasonably request. As used herein, the term “Prospectus
Delivery Period” means such period of time after the first date of the public offering of the Public Units as in the
opinion of counsel for the Underwriters a prospectus relating to the Public Units is required by law to be delivered (or required
to be delivered but for Rule 172 under the Securities Act) in connection with sales of the Public Units by any Underwriter or
dealer.
(c) Amendments
or Supplements. Before making, preparing, using, authorizing, approving, referring to or filing any amendment or supplement
to the Registration Statement, the Pricing Disclosure Package or the Prospectus, the Company will furnish to the Representatives
and counsel for the Underwriters a copy of the proposed amendment or supplement for review and will not make, prepare, use, authorize,
approve, refer to or file any such proposed amendment or supplement to which the Representatives reasonably object.
(d) Notice
to the Representatives. The Company will advise the Representatives promptly, and confirm such advice in writing, (i) when
the Registration Statement has become effective; (ii) when any amendment to the Registration Statement has been filed or becomes
effective; (iii) when any supplement to the Pricing Disclosure Package, the Prospectus or any Written Testing-the-Waters Communication
or any amendment to the Prospectus has been filed or distributed; (iv) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or the receipt of any comments from the Commission relating
to the Registration Statement or any other request by the Commission for any additional information, including, but not limited
to, any request for information concerning any Testing-the-Waters Communication; (v) of the issuance by the Commission or any
other governmental or regulatory authority of any order suspending the effectiveness of the Registration Statement or preventing
or suspending the use of any Preliminary Prospectus, any of the Pricing Disclosure Package, the Prospectus or any Written Testing-the-Waters
Communication or the initiation or threatening of any proceeding for that purpose or pursuant to Section 8A of the Securities
Act; (vi) of the occurrence of any event or development within the Prospectus Delivery Period as a result of which the Prospectus,
any of the Pricing Disclosure Package or any Written Testing-the-Waters Communication as then amended or supplemented would include
any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in
the light of the circumstances existing when the Prospectus, the Pricing Disclosure Package or any Written Testing-the-Waters
Communication is delivered to a purchaser, not misleading; and (vii) of the receipt by the Company of any notice with respect
to any suspension of the qualification of the Public Units for offer and sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose; and the Company will use its reasonable best efforts to prevent the issuance of any such order
suspending the effectiveness of the Registration Statement, preventing or suspending the use of any Preliminary Prospectus, any
of the Pricing Disclosure Package or the Prospectus or any Written Testing-the-Waters Communication or suspending any such qualification
of the Public Units and, if any such order is issued, will obtain as soon as possible the withdrawal thereof.
(e) Ongoing
Compliance. (1) If during the Prospectus Delivery Period (i) any event or development shall occur or condition shall exist
as a result of which the Prospectus as then amended or supplemented would include any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements therein, in the light of the circumstances existing when
the Prospectus is delivered to a purchaser, not misleading or (ii) it is necessary to amend or supplement the Prospectus to comply
with law, the Company will immediately notify the Underwriters thereof and forthwith prepare and, subject to paragraph (c) above,
file with the Commission and furnish to the Underwriters and to such dealers as the Representatives may designate such amendments
or supplements to the Prospectus as may be necessary so that the statements in the Prospectus as so amended or supplemented will
not, in the light of the circumstances existing when the Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus will comply with law and (2) if at any time prior to the Closing Date (i) any event or development shall occur
or condition shall exist as a result of which the Pricing Disclosure Package as then amended or supplemented would include any
untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the
light of the circumstances existing when the Pricing Disclosure Package is delivered to a purchaser, not misleading or (ii) it
is necessary to amend or supplement the Pricing Disclosure Package to comply with law, the Company will immediately notify the
Underwriters thereof and forthwith prepare and, subject to paragraph (c) above, file with the Commission (to the extent required)
and furnish to the Underwriters and to such dealers as the Representatives may designate such amendments or supplements to the
Pricing Disclosure Package as may be necessary so that the statements in the Pricing Disclosure Package as so amended or supplemented
will not, in the light of the circumstances existing when the Pricing Disclosure Package is delivered to a purchaser, be misleading
or so that the Pricing Disclosure Package will comply with law.
(f) Blue
Sky Compliance. The Company will qualify the Public Units for offer and sale under the securities or Blue Sky laws of such
jurisdictions as the Representatives shall reasonably request and will continue such qualifications in effect so long as required
for distribution of the Public Units; provided that the Company shall not be required to (i) qualify as a foreign
corporation or other entity or as a dealer in securities in any such jurisdiction where it would not otherwise be required to
so qualify, (ii) file any general consent to service of process in any such jurisdiction or (iii) subject itself to taxation in
any such jurisdiction if it is not otherwise so subject.
(g) Earning
Statement. The Company will make generally available to its security holders and the Representatives as soon as practicable
an earning statement that satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 of the Commission promulgated
thereunder covering a period of at least twelve months beginning with the first fiscal quarter of the Company occurring after
the “effective date” (as defined in Rule 158) of the Registration Statement.
(h) Clear
Market. For a period of 180 days after the date of the Prospectus, the Company will not (i) offer, pledge, sell, contract
to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant
to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, or submit to, or file with, the Commission a registration
statement under the Securities Act relating to, any Units, shares of Common Stock, Founder Shares, Warrants or any securities
convertible into or exercisable or exchangeable for any Units, Common Stock, Founder Shares or Warrants, or publicly disclose
the intention to undertake any of the foregoing, or (ii) enter into any swap or other arrangement that transfers, in whole or
in part, any of the economic consequences of ownership of any Units, shares of Common Stock, Founder Shares or Warrants or any
such other securities, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Units
or such other securities, in cash or otherwise, without the prior written consent of the Representatives, except, in each case,
that the Company may (a) issue and sell the Private Placement Units, (b) issue and sell the Option Units on exercise of the Underwriters’
option provided for in Section 2(b) hereof, (c) register with the Commission pursuant to the Registration Rights Agreement, in
accordance with the terms of the Registration Rights Agreement, the resale of the Founder Shares, Private Placement Units, Private
Placement Shares, Private Placement Warrants and units that may be issued upon conversion of working capital loans and the shares
of Common Stock and warrants included therein (and any shares of Common Stock issuable upon the exercise of the Private Placement
Warrants or warrants included in the units issued upon conversion of working capital loans), and (d) issue securities in connection
with a Business Combination; provided that the foregoing restrictions shall not apply to the forfeiture of any Founder
Shares pursuant to their terms or any transfer of Founder Shares to any current or future independent director of the Company
(so long as such current or future independent director is subject to the terms of the Insider Letter with respect to such Founder
Shares at the time of such transfer; and so long as, to the extent any Section 16 of the Exchange Act reporting obligation is
triggered as a result of such transfer, any related Section 16 of the Exchange Act filing includes a practical explanation as
to the nature of the transfer). The Representatives in their sole discretion may release any of the securities subject to these
lock-up agreements at any time without notice.
If the Representatives,
in their sole discretion, agree to release or waive the transfer restrictions set forth in the Insider Letter for an officer or
director of the Company and provide the Company with notice of the impending release or waiver at least three business days before
the effective date of the release or waiver, the Company agrees to announce the impending release or waiver by a press release
substantially in the form of Exhibit A hereto through a major news service at least two business days before the effective
date of the release or waiver. The Company agrees not to amend the Insider Letter without the written consent of the Representatives.
(i) Use of Proceeds. The Company will apply the net proceeds from the sale of the Private Placement Units received by it
in a manner materially consistent with the applications described under the caption “Use of Proceeds” in the Pricing
Disclosure Package and the Prospectus.
(j) No Stabilization. Neither the Company nor its affiliates will take, directly or indirectly, any action designed to or
that could reasonably be expected to cause or result in any stabilization or manipulation of the price of the Units.
(k) Exchange
Listing. The Company will use its reasonable best efforts to list, subject to notice of issuance, the Public Units, the Common
Stock and the Public Warrants on the Exchange.
(l) Reports.
For a period commencing on the initial effective date of the Registration Statement and ending five years from the date of the
consummation of the Business Combination or until such earlier time at which the Liquidation occurs, the Company shall, to the
extent such information or documents are not otherwise publicly available, upon written request from the Representatives, furnish
to the Representatives copies of such financial statements and other periodic and special reports as the Company from time to
time furnishes generally to holders of any class of securities, and, to the extent such information or documents are not otherwise
publicly available, upon written request from the Representatives, promptly furnish to the Representatives; (i) a copy of
such registration statements, financial statements and periodic and special reports as the Company shall be required to file with
the Commission and from time to time furnishes generally to holders of any such class of its securities in their capacities as
such; and (ii) such additional documents and information with respect to the Company and the affairs of any future subsidiaries
of the Company as the Representatives may from time to time reasonably request, all subject to the execution of a satisfactory
confidentiality agreement. Any registration statements, financial statements, periodic and special reports or other additional
documents referred to in the preceding sentence filed or furnished on the Commission’s EDGAR website and publicly available
will be considered furnished for the purposes of this Section 4(l).
(m) Filings.
The Company will file with the Commission such reports as may be required by Rule 463 under the Securities Act.
(n) Emerging
Growth Company. The Company will promptly notify the Representatives if the Company ceases to be an Emerging Growth Company
at any time prior to the later of (i) completion of the distribution of Public Units within the meaning of the Securities Act
and (ii) completion of the 180-day restricted period referred to in Section 4(h) hereof.
(o) Exchange
Act Registration. For a period commencing on the initial effective date of the Registration Statement and ending five years
from the date of the consummation of the Business Combination or until such earlier time at which the Liquidation occurs, the
Company will use commercially reasonable efforts to maintain the registration of the Common Stock (or such other security into
which such Common Stock may be exchanged in connection with a Business Combination) under the provisions of the Exchange Act,
except after giving effect to a going private transaction after the completion of an initial Business Combination. For a period
commencing on the initial effective date of the Registration Statement and ending upon the consummation of the Business Combination
or until such earlier time at which the Liquidation occurs, the Company will use commercially reasonable efforts to maintain the
registration of the Public Units and Public Warrants under the provisions of the Exchange Act. During such applicable period,
the Company will not deregister the Public Units, Common Stock or Public Warrants under the Exchange Act (except in connection
with an exchange pursuant to a Business Combination or a going private transaction after the completion of an initial Business
Combination) without the prior written consent of the Representatives.
(p) Current
Report on Form 8-K. The Company shall, on the date hereof, retain its independent registered public accounting firm to audit
the balance sheet of the Company as of the Closing Date (the “Audited Balance Sheet”) reflecting the receipt
by the Company of the proceeds of the Offering on the Closing Date. As soon as the Audited Balance Sheet becomes available, the
Company shall promptly, but not later than four business days after the Closing Date, file a Current Report on Form 8-K with the
Commission, which Current Report shall contain the Company’s Audited Balance Sheet. Additionally, upon the Company’s
receipt of the proceeds from the exercise of all or any portion of the option provided for in Section 2(b) hereof, the
Company shall promptly, but not later than four business days after the receipt of such proceeds, file a Current Report on Form
8-K with the Commission, which report shall disclose the Company’s sale of the Option Units and its receipt of the proceeds
therefrom, unless the receipt of such proceeds are reflected in the Current Report on Form 8-K referenced in the immediately prior
sentence.
(q) Quarterly Review. For a period commencing on the initial effective date of the Registration Statement and ending five
years from the date of the consummation of the Business Combination or until such earlier time at which the Liquidation occurs
or the Common Stock and Public Warrants cease to be publicly traded, the Company, at its expense, shall cause its regularly engaged
independent registered public accounting firm to review (but not audit) the Company’s financial statements for each of the
first three fiscal quarters prior to the announcement of quarterly financial information, the filing of the Company’s Form
10-Q quarterly report and the mailing, if any, of quarterly financial information to stockholders.
(r) Rule 462(b) Registration Statement. If the Company elects to rely upon Rule 462(b) under the Securities Act, the
Company shall file a Rule 462(b) Registration Statement with the Commission in compliance with Rule 462(b) by 10:00 P.M., Washington,
D.C. time, on the date of this Agreement, and the Company shall at the time of filing either pay to the Commission the filing fee
for the Rule 462(b) Registration Statement or give irrevocable instructions for the payment of such fee pursuant to Rule 111 under
the Securities Act.
(s) Transfer
and Warrant Agent. For a period commencing on the initial effective date of the Registration Statement and ending five years
from the date of the consummation of the Business Combination or until such earlier time at which the Liquidation occurs or the
Common Stock and Public Warrants cease to be publicly traded, the Company shall retain a transfer and warrant agent.
(t) Initial
Business Combination. The Company will not consummate an initial Business Combination with any entity that is affiliated with
the Sponsor or any of the Company’s officers or directors unless it or a committee of independent and disinterested members
of its board of directors obtains an opinion from an independent investment banking firm that is a member of FINRA, or from an
independent accounting firm, that such initial Business Combination is fair to the Company from a financial point of view. The
Company shall not pay the Sponsor or its affiliates or any of the Company’s officers, directors or any of their respective
affiliates any fees or compensation of any kind for services rendered to the Company prior to, or in connection with, the consummation
of an initial Business Combination; provided, however, that (x) such officers, directors and affiliates (i) may
receive reimbursement for out-of-pocket expenses incurred by them in connection with activities on the Company’s behalf
related to identifying, investigating, negotiating and completing an initial Business Combination and (ii) may be repaid loans
as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus and (y) the Sponsor may receive
up to $20,000 per month pursuant to the Administrative Services Agreement for office space, utilities, general office and secretarial
support, and administrative and support services provided to the Company, none of which payments described in (x) or (y) will
be made from the proceeds held in the Trust Account prior to completion of the initial Business Combination.
(u) FINRA
Submissions. For a period of 60 days following the effective date of the Registration Statement, in the event any person or
entity (regardless of any FINRA affiliation or association) is engaged to assist the Company in its search for a merger candidate
or to provide any other merger and acquisition services, or has provided or will provide any investment banking, financial, advisory
and/or consulting services to the Company, the Company agrees that it shall promptly provide to FINRA (via a FINRA submission),
the Representatives and their counsel a notification prior to entering into the agreement or transaction relating to a potential
Business Combination: (i) the identity of the person or entity providing any such services; (ii) complete details of all
such services and copies of all agreements governing such services prior to entering into the agreement or transaction; and (iii)
justification as to why the value received by any person or entity for such services is not underwriting compensation for the
Offering. The Company also agrees that proper disclosure of such arrangement or potential arrangement will be made in the tender
offer materials or proxy statement, as applicable, which the Company may file in connection with the Business Combination for
purposes of offering redemption of shares held by its stockholders or for soliciting stockholder approval, as applicable.
(v) Affiliates
or Associated Persons of Members. The Company shall advise FINRA, the Representatives and their counsel if it is aware that
any 10% or greater stockholder of the Company becomes an affiliate or associated person of a Member participating in the distribution
of the Public Units.
(w) Trust
Account Investments. The Company shall cause the proceeds of the Offering and the sale of the Private Placement Warrants to
be held in the Trust Account to be invested only in United States government treasury bills with a maturity of 185 days or less
or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act as set forth in the Trust
Agreement and disclosed in the Pricing Disclosure Package and the Prospectus. The Company will otherwise conduct its business
in a manner so that it will not become subject to the Investment Company Act. Furthermore, once the Company consummates an initial
Business Combination, it will not be required to register as an investment company under the Investment Company Act.
(x) Use
of Funds in Trust Account. During the period prior to the Company’s initial Business Combination or Liquidation, the
Company may instruct the Trustee to release from the Trust Account, (i) solely from interest income earned on the funds held in
the Trust Account, the amounts necessary to pay the Company’s franchise and income tax obligations, if any, and (ii) to
pay Public Stockholders who properly redeem their Public Shares (as defined below) in connection with a stockholder vote to approve
an amendment to the Company’s Amended and Restated Certificate of Incorporation (x) to modify the substance or timing
of the Company’s obligation to allow redemptions in connection with its initial Business Combination or to redeem 100% of
the outstanding Public Shares if the Company has not consummated an initial Business Combination within 24 months from the closing
of the Offering or (y) with respect to any other provision relating to stockholders’ rights or pre-initial Business Combination
activity. Otherwise, all funds held in the Trust Account (including any interest income earned on the amounts held in the Trust
Account (net of taxes payable thereon in accordance with the preceding sentence)) will remain in the Trust Account until the earlier
of the consummation of the Company’s initial Business Combination and the Liquidation; provided, however,
that in the event of the Liquidation, up to $100,000 of interest income may be released to the Company if the proceeds of the
Offering held by the Company outside of the Trust Account are not sufficient to cover the costs and expenses associated with implementing
the Company’s plan of dissolution.
(y) Availability
of Authorized but Unissued Securities. The Company will reserve and keep available that maximum number of its authorized but
unissued securities that are issuable upon the exercise of any of the Public Warrants, the Private Placement Warrants and warrants
underlying the units that may be issued upon conversion of working capital loans outstanding from time to time and upon the conversion
of the Founder Shares.
(z) No
Additional Issuances prior to the Business Combination. Prior to the earlier of the consummation of an initial Business Combination
and the Liquidation, the Company shall not issue (other than in replacement for lost, stolen or mutilated certificates) any shares
of Common Stock, Warrants or any options or other securities convertible into shares of Common Stock, or any preferred stock,
in each case, that (1) receive funds from the Trust Account or (2) vote as a class with the Public Shares (a) on any initial Business
Combination or (b) to approve an amendment to the Company’s Amended and Restated Certificate of Incorporation to (i) extend
the time the Company has to consummate a Business Combination beyond 24 months from the Closing Date or (ii) amend the foregoing
provisions.
(aa) Audit
Committee Review. Prior to the earlier of the consummation of an initial Business Combination and the Liquidation, the Company’s
audit committee will review on a quarterly basis all payments made by the Company to the Sponsor, to the Company’s officers
or directors, or to the Company’s or any of such other persons’ respective affiliates.
(bb) Penny
Stock. The Company agrees that it will use commercially reasonable efforts to prevent the Company from becoming subject to
Rule 419 under the Securities Act prior to the consummation of any Business Combination, including, but not limited to, using
its best efforts to prevent any of the Company’s outstanding securities from being deemed to be a “penny stock”
as defined in Rule 3a51-1 under the Exchange Act during such period.
(cc) Internal
Controls. To the extent required by Rule 13a-15(e) under the Exchange Act, the Company will maintain “disclosure controls
and procedures” (as defined under Rule 13a-15(e) under the Exchange Act) and a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management’s general or
specific authorization, (ii) transactions are recorded as necessary in order to permit preparation of financial statements in
accordance with GAAP and to maintain accountability for assets, (iii) access to assets is permitted only in accordance with
management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with respect to any differences.
(dd) Maintenance
of Listing. The Company will use commercially reasonable efforts to effect and maintain the listing of (x) the Public Units
and Public Warrants on the Exchange (or another national securities exchange) until the consummation of the Business Combination
or until such earlier time at which the Liquidation occurs, and (y) the Common Stock on the Exchange (or another national securities
exchange) until five years from the date of the consummation of the Business Combination or until such earlier time at which Liquidation
occurs.
(ee) Sarbanes
Oxley. As soon as legally required to do so, the Company and its directors and officers, in their capacities as such, shall
take all actions necessary to comply with any applicable provisions of the Sarbanes-Oxley Act, including Section 402 related to
loans and Sections 302 and 906 related to certifications, and to comply with the rules of the Exchange.
(ff) Certificate
of Incorporation. The Company shall not take any action or omit to take any action that would cause the Company to be in breach
or violation of its Amended and Restated Certificate of Incorporation.
(gg) Consummate
the Initial Business Combination. The Company, subject to any applicable provision of the Company’s Amended and Restated
Certificate of Incorporation, may consummate the initial Business Combination and conduct redemptions of Public Shares for cash
upon consummation of such Business Combination without a stockholder vote pursuant to Rule 13e-4 and Regulation 14E under
the Exchange Act, including the filing of tender offer documents with the Commission. Such tender offer documents will contain
substantially the same financial and other information about the initial Business Combination and the redemption rights as is
required under the Commission’s proxy rules and will provide each stockholder of the Company with the opportunity prior
to the consummation of the initial Business Combination to redeem the shares of Common Stock held by such stockholder for an amount
of cash equal to (A) the aggregate amount then on deposit in the Trust Account, calculated as of two business days prior
to the consummation of the initial Business Combination, representing (x) the proceeds held in the Trust Account from the Offering
and the sale of the Private Placement Units and (y) any interest income earned on the funds held in the Trust Account (which
interest shall be net of taxes payable), divided by (B) the total number of shares of Common Stock sold as part of the Public
Units (the “Public Shares”) then outstanding. If, however, a stockholder vote is required by applicable law
or stock exchange listing requirement in connection with the initial Business Combination, or the Company decides to hold a stockholder
vote for business or other reasons, the Company will submit such Business Combination to the Company’s stockholders for
their approval (“Business Combination Vote”). With respect to the initial Business Combination Vote, if any,
each of the Sponsor, PA-2 Co-Investment, the CH Founder Share Subscribers and the Company’s directors and officers
has agreed to vote all of the Founder Shares and Public Shares it then holds, if any, in favor of the Company’s initial
Business Combination. If the Company seeks stockholder approval of the initial Business Combination, the Company will offer to
each Public Stockholder the right to have its shares redeemed in conjunction with a proxy solicitation pursuant to the proxy rules
of the Commission at a per share redemption price (the “Redemption Price”) equal to (I) the aggregate amount
then on deposit in the Trust Account, calculated as of two business days prior to the consummation of the initial Business Combination,
representing (1) the proceeds held in the Trust Account from the Offering and the sale of the Private Placement Units and (2)
interest income earned on the funds held in the Trust Account (which interest shall be net of any taxes payable), divided by (II)
the total number of Public Shares then outstanding. If the Company seeks stockholder approval of the initial Business Combination,
the Company may proceed with such Business Combination only if a majority of the outstanding shares voted by the stockholders
at a duly held stockholders meeting are voted to approve such Business Combination. If, after seeking and receiving such stockholder
approval, the Company elects to so proceed, it will redeem shares, at the Redemption Price, from those Public Stockholders who
validly and affirmatively requested such redemption. Only Public Stockholders who properly exercise their redemption rights, in
accordance with the applicable tender offer or proxy materials related to such Business Combination and the Amended and Restated
Certificate of Incorporation, shall be entitled to receive distributions from the Trust Account in connection with an initial
Business Combination, and the Company shall pay no distributions with respect to any other holders of shares of capital stock
of the Company in connection therewith. In the event that the Company does not effect a Business Combination by 24 months from
the closing of the Offering (or such later date as has been approved pursuant to a valid amendment to the Company’s Amended
and Restated Certificate of Incorporation), the Company will (i) cease all operations except for the purpose of winding up, (ii) as
promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding Public Shares,
at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest
(which interest shall be net of taxes payable and less up to $100,000 of such net 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), and (iii) as promptly as reasonably
possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s
board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide
for claims of creditors and the requirements of other applicable law. Only Public Stockholders holding shares of Common Stock
included in the Public Units shall be entitled to receive such redemption amounts and the Company shall pay no such redemption
amounts or any distributions in liquidation with respect to any other shares of capital stock of the Company. The Sponsor, PA-2 Co-Investment,
the CH Founder Share Subscribers and the Company’s officers and directors have agreed that they will not propose any amendment
to the Company’s Amended and Restated Certificate of Incorporation (A) to modify the substance or timing of the Company’s
obligation to allow redemption in connection with its initial Business Combination or to redeem 100% of the outstanding Public
Shares if the Company has not consummated an initial Business Combination within 24 months from the closing of the Offering or
(B) with respect to any other provision relating to stockholders’ rights or pre-initial Business Combination activity,
unless the Company offers to the Public Stockholders the right to redeem their Public Shares in connection with such amendment,
as described in the Pricing Disclosure Package and Prospectus.
(hh) Business
Combination Announcement. In the event that the Company desires or is required by an applicable law or regulation to cause
an announcement (a “Business Combination Announcement”) to be placed in The Wall Street Journal, The New York
Times or any other news or media publication or outlet or to be made via a public filing or submission with the Commission announcing
the consummation of an initial Business Combination that indicates that the Underwriters were the underwriters in the Offering,
the Company shall supply the Representatives with a draft of the Business Combination Announcement and provide the Representatives
with a reasonable advance opportunity to comment thereon, subject to the agreement of the Underwriters to keep confidential such
draft announcement in accordance with the Representatives’ standard policies regarding confidential information.
(ii) Forfeiture.
Upon the earlier to occur of the expiration and termination of the Underwriters’ over-allotment option, the Company shall
cancel or otherwise effect the forfeiture of Founder Shares from the Sponsor, PA-2 Co-Investment and the CH Founder Share
Subscribers, in an aggregate amount equal to the number of Founder Shares determined by multiplying (a) 937,500 by (b) a fraction,
(i) the numerator of which is 3,750,000 minus the number of Option Units purchased by the Underwriters upon the exercise of their
over-allotment option, and (ii) the denominator of which is 3,750,000. For the avoidance of doubt, if the Underwriters exercise
their over-allotment option in full, the Company shall not cancel or otherwise effect the forfeiture of the Founder Shares pursuant
to this Section 4(ii).
(jj) Written
Testing-the-Waters Communication. If at any time following the distribution of any Written Testing-the-Waters Communication,
there occurred or occurs an event or development as a result of which such Written Testing-the-Waters Communication included or
would include any untrue statement of a material fact or omitted or would omit to state any material fact necessary to make the
statements therein in the light of the circumstances existing at that subsequent time, not misleading, the Company will promptly
(i) notify the Representatives so that use of the Written Testing-the-Waters Communication may cease until it is amended or supplemented;
(ii) amend or supplement, at its own expense, such Written Testing-the-Waters Communication to eliminate or correct such untrue
statement or omission; and (iii) supply any amendment or supplement to the Representatives in such quantities as may be reasonably
requested.
(kk) Emerging
Growth Company. The Company will promptly notify the Representatives if the Company ceases to be an Emerging Growth Company
at any time prior to the later of (i) completion of the distribution of the Public Units within the meaning of the Securities
Act and (ii) completion of the 180-day restricted period referred to in Section 4(h) hereof.
(ll) Delivery
of Documents. The Company will deliver to the Representatives executed copies of the Trust Agreement, the Warrant Agreement,
the Founder Purchase Agreements, the Sponsor Promissory Note, the Unit Purchase Agreements, the Registration Rights Agreement,
the Insider Letter, the Administrative Services Agreement and the Business Combination Marketing Agreement.
(mm) Trust
Account Waiver. The Company will seek to have all vendors, service providers (other than the Underwriters and its independent
registered public accounting firm), prospective target businesses and other entities with which it does business enter into an
agreement waiving any right, title, interest or claim of any kind in or to any monies held in the Trust Account for the benefit
of the Public Stockholders. The Company may forego obtaining such waivers only if the Company’s management shall have determined
that such third party’s engagement would be significantly more beneficial to the Company than any alternative.
(nn) Certification
of Beneficial Ownership. The Company will deliver to each Underwriter (or its agent), on the date of execution of this Agreement,
a properly completed and executed Certification Regarding Beneficial Owners and Key Controllers of Legal Entity Customers, together
with copies of identifying documentation, and the Company undertakes to provide such additional supporting documentation as each
Underwriter may reasonably request in connection with the verification of the foregoing Certification.
5. Certain Agreements of the Underwriters. Each of the Underwriters hereby represents and agrees that it is not subject
to any pending proceeding under Section 8A of the Securities Act with respect to the Offering (and will promptly notify the
Company if any such proceeding against it is initiated during the Prospectus Delivery Period).
6. Conditions of Underwriters’ Obligations. The obligation of each Underwriter to purchase the Underwritten Units
on the Closing Date or the Option Units on the Additional Closing Date, as the case may be, as provided herein is subject to the
performance by the Company of its covenants and other obligations hereunder and to the following additional conditions:
(a) Registration
Compliance; No Stop Order. No order suspending the effectiveness of the Registration Statement shall be in effect, and no
proceeding for such purpose or pursuant to Section 8A under the Securities Act shall be pending before or threatened by the
Commission; the Prospectus shall have been timely filed with the Commission under the Securities Act and in accordance with Section
4(a) hereof; and all requests by the Commission for additional information shall have been complied with to the reasonable
satisfaction of the Representatives.
(b) Representations
and Warranties. The representations and warranties of the Company contained herein shall be true and correct on the date hereof
and on and as of the Closing Date or the Additional Closing Date, as the case may be; and the statements of the Company and its
officers made in any certificates delivered pursuant to this Agreement shall be true and correct on and as of the Closing Date
or the Additional Closing Date, as the case may be.
(c) No
Material Adverse Change. No event or condition of a type described in Section 3(i) hereof shall have occurred
or shall exist, which event or condition is not described in the Pricing Disclosure Package (excluding any amendment or supplement
thereto) and the Prospectus (excluding any amendment or supplement thereto) and the effect of which in the judgment of the Representatives
makes it impracticable or inadvisable to proceed with the offering, sale or delivery of the Units on the Closing Date or the Additional
Closing Date, as the case may be, on the terms and in the manner contemplated by this Agreement, the Pricing Disclosure Package
and the Prospectus.
(d) Officers’
Certificate. The Representatives shall have received on and as of the Closing Date or the Additional Closing Date, as the
case may be, a certificate of the chief financial officer or chief accounting officer of the Company and one additional senior
executive officer of the Company who is satisfactory to the Representatives (i) confirming that such officers have carefully reviewed
the Registration Statement, the Pricing Disclosure Package and the Prospectus and, to the knowledge of such officers, the representations
set forth in Sections 3(b) and 3(c) hereof are true and correct, (ii) confirming that the other representations
and warranties of the Company in this Agreement are true and correct and that the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied hereunder at or prior to the Closing Date or the Additional
Closing Date, as the case may be, and (iii) to the effect set forth in paragraphs (a) and (c) above.
(e) Comfort
Letters. On the date of this Agreement and on the Closing Date or the Additional Closing Date, as the case may be, Marcum
LLP shall have furnished to the Representatives, at the request of the Company, letters, dated the respective dates of delivery
thereof and addressed to the Underwriters, in form and substance reasonably satisfactory to the Representatives, containing statements
and information of the type customarily included in accountants’ “comfort letters” to underwriters with respect
to the financial statements and certain financial information contained in each of the Registration Statement, the Pricing Disclosure
Package and the Prospectus; provided, that the letter delivered on the Closing Date or the Additional Closing Date, as
the case may be, shall use a “cut-off” date no more than two business days prior to such Closing Date or such Additional
Closing Date, as the case may be.
(f) Opinion
and 10b-5 Statement of Counsel for the Company. BraunHagey & Borden LLP, counsel for the Company, shall have furnished
to the Representatives, at the request of the Company, their written opinion and 10b-5 statement, dated the Closing Date or the
Additional Closing Date, as the case may be, and addressed to the Underwriters, in form and substance reasonably satisfactory
to the Representatives.
(g) Opinion
and 10b-5 Statement of Counsel for the Underwriters. The Representatives shall have received on and as of the Closing Date
or the Additional Closing Date, as the case may be, an opinion and 10b-5 statement, addressed to the Underwriters, of Greenberg
Traurig, P.A., counsel for the Underwriters, with respect to such matters as the Representatives may reasonably request, and such
counsel shall have received such documents and information as they may reasonably request to enable them to pass upon such matters.
(h) No
Legal Impediment to Issuance and Sale. No action shall have been taken and no statute, rule, regulation or order shall have
been enacted, adopted or issued by any federal, state or foreign governmental or regulatory authority that would, as of the Closing
Date or the Additional Closing Date, as the case may be, prevent the issuance or sale of the Public Units; and no injunction or
order of any federal, state or foreign court shall have been issued that would, as of the Closing Date or the Additional Closing
Date, as the case may be, prevent the issuance or sale of the Public Units.
(i) Good
Standing. The Representatives shall have received on and as of the Closing Date or the Additional Closing Date, as the case
may be, satisfactory evidence of the good standing of the Company in its jurisdiction of organization and its good standing in
such other jurisdictions as the Representatives may reasonably request, in each case in writing or any standard form of telecommunication
from the appropriate governmental authorities of such jurisdictions.
(j) Exchange
Listing. The Public Units to be delivered on the Closing Date or the Additional Closing Date, as the case may be, shall have
been approved for listing on the Exchange, subject to official notice of issuance.
(k) Delivery
of Transaction Documents. On or prior to the Closing Date, the Company shall have delivered to the Representatives executed
copies of this Agreement, the Trust Agreement, the Warrant Agreement, the Founder Purchase Agreements, the Sponsor Promissory
Note, the Unit Purchase Agreements, the Registration Rights Agreement, the Insider Letter, the Administrative Services Agreement
and the Business Combination Marketing Agreement, and each of the Transaction Documents shall be in full force and effect on the
Closing Date or the Additional Closing Date, as the case may be.
(l) Funding
of Private Placement Units. At least one business day prior to the Closing Date or the Additional Closing Date, as applicable,
the Company shall have caused proceeds from the sale of the Private Placement Units to be deposited into the Trust Account such
that the cumulative amount deposited into the Trust Account as of such Closing Date or Additional Closing Date shall equal the
product of the number of Public Units sold in the Offering as of such Closing Date or Additional Closing Date and the public offering
price per Public Unit as set forth on the cover of the Prospectus.
(m) FINRA.
FINRA shall not have raised any objection with respect to the fairness or reasonableness of the underwriting or other arrangements
of the transactions contemplated hereby.
(n) Additional
Documents. On or prior to the Closing Date or the Additional Closing Date, as the case may be, the Company shall have furnished
to the Representatives such further certificates and documents as the Representatives may reasonably request.
All opinions, letters,
certificates and evidence mentioned above or elsewhere in this Agreement shall be deemed to be in compliance with the provisions
hereof only if they are in form and substance reasonably satisfactory to counsel for the Underwriters.
7. Indemnification
and Contribution.
(a) Indemnification
of the Underwriters.
(i)
The Company agrees to indemnify and hold harmless each Underwriter, each of its affiliates, directors and officers and each
person, if any, who controls such Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, from and against any and all losses, claims, damages and liabilities (including, without limitation, legal fees and other
expenses incurred in connection with any suit, action or proceeding or any claim asserted, as such fees and expenses are incurred),
joint or several, that arise out of, or are based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or caused by any omission or alleged omission to state therein a material fact required
to be stated therein or necessary in order to make the statements therein, not misleading, or (ii) any untrue statement or alleged
untrue statement of a material fact contained in the Prospectus (or any amendment or supplement thereto), any Preliminary Prospectus,
any Written Testing-the-Waters Communication, any road show as defined in Rule 433(h) under the Securities Act (a “road
show”) or any Pricing Disclosure Package (including any Pricing Disclosure Package that has subsequently been amended),
or caused by any omission or alleged omission to state therein a material fact necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading, in each case except insofar as such losses, claims, damages
or liabilities arise out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with any information relating to any Underwriter furnished to the Company in writing by such Underwriter
through the Representatives expressly for use therein, it being understood and agreed that the only such information furnished
by any Underwriter consists of the information described as such in paragraph (b) below.
(b) Indemnification
of the Company. Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Company and each of
its directors, each of its officers who signed the Registration Statement and each person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the indemnity set forth
in paragraph (a) above, but only with respect to any losses, claims, damages or liabilities that arise out of, or are based upon,
any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with any information
relating to such Underwriter furnished to the Company in writing by such Underwriter through the Representatives expressly for
use in the Registration Statement, the Prospectus (or any amendment or supplement thereto), any Preliminary Prospectus, any Written
Testing-the-Waters Communication, any road show or any Pricing Disclosure Package (including any Pricing Disclosure Package that
has subsequently been amended), it being understood and agreed that the only such information furnished by any Underwriter consists
of the following information in the Prospectus furnished on behalf of each Underwriter: (y) the concession figure appearing in
the fourth paragraph under the caption “Underwriting” and (z) the seventh paragraph, the sixteenth paragraph and the
seventeenth paragraph under the caption “Underwriting.”
(c) Notice
and Procedures. If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand
shall be brought or asserted against any person in respect of which indemnification may be sought pursuant to the preceding paragraphs
of this Section 7, such person (the “Indemnified Person”) shall promptly notify the person against whom
such indemnification may be sought (the “Indemnifying Person”) in writing; provided that the failure
to notify the Indemnifying Person shall not relieve it from any liability that it may have under the preceding paragraphs of this
Section 7 except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or
defenses) by such failure; and provided, further, that the failure to notify the Indemnifying Person shall not relieve
it from any liability that it may have to an Indemnified Person otherwise than under the preceding paragraphs of this Section
7. If any such proceeding shall be brought or asserted against an Indemnified Person and it shall have notified the Indemnifying
Person thereof, the Indemnifying Person shall retain counsel reasonably satisfactory to the Indemnified Person (who shall not,
without the consent of the Indemnified Person, be counsel to the Indemnifying Person) to represent the Indemnified Person and
any others entitled to indemnification pursuant to this Section 7 that the Indemnifying Person may designate in such
proceeding and shall pay the fees and expenses in such proceeding and shall pay the fees and expenses of such counsel related
to such proceeding, as incurred. In any such proceeding, any Indemnified Person shall have the right to retain its own counsel,
but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless (i) the Indemnifying Person
and the Indemnified Person shall have mutually agreed to the contrary; (ii) the Indemnifying Person has failed within a reasonable
time to retain counsel reasonably satisfactory to the Indemnified Person; (iii) the Indemnified Person shall have reasonably concluded
that there may be actual or potential legal defenses available to it that are different from or in addition to those available
to the Indemnifying Person; or (iv) the named parties in any such proceeding (including any impleaded parties) include both
the Indemnifying Person and the Indemnified Person and representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them. It is understood and agreed that the Indemnifying Person shall not,
in connection with any proceeding or related proceeding in the same jurisdiction, be liable for the fees and expenses of more
than one separate firm (in addition to any local counsel) for all Indemnified Persons, and that all such fees and expenses shall
be paid or reimbursed as they are incurred. Any such separate firm for any Underwriter, its affiliates, directors and officers
and any control persons of such Underwriter shall be designated in writing by the Representatives and any such separate firm for
the Company, its directors, its officers who signed the Registration Statement and any control persons of the Company shall be
designated in writing by the Company. The Indemnifying Person shall not be liable for any settlement of any proceeding effected
without its written consent, but if settled with such consent, the Indemnifying Person agrees to indemnify each Indemnified Person
from and against any loss or liability by reason of such settlement. Notwithstanding the foregoing sentence, if at any time an
Indemnified Person shall have requested that an Indemnifying Person reimburse the Indemnified Person for fees and expenses of
counsel as contemplated by this paragraph, the Indemnifying Person shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 30 days after receipt by the Indemnifying Person
of such request and (ii) the Indemnifying Person shall not have reimbursed the Indemnified Person in accordance with such request
prior to the date of such settlement. No Indemnifying Person shall, without the written consent of the Indemnified Person, effect
any settlement of any pending or threatened proceeding in respect of which any Indemnified Person is or could have been a party
and indemnification could have been sought hereunder by such Indemnified Person, unless such settlement (x) includes an unconditional
release of such Indemnified Person, in form and substance reasonably satisfactory to such Indemnified Person, from all liability
on claims that are the subject matter of such proceeding and (y) does not include any statement as to or any admission of fault,
culpability or a failure to act by or on behalf of any Indemnified Person.
(d) Contribution.
If the indemnification provided for in paragraphs (a) or (b) above is unavailable to an Indemnified Person or insufficient in
respect of any losses, claims, damages or liabilities referred to therein, then each Indemnifying Person under such paragraph,
in lieu of indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or payable by such Indemnified
Person as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company, on the one hand, and the Underwriters on the other, from the Offering or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) but also the relative fault of the Company, on the one hand, and the Underwriters
on the other, in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits received by the Company, on the one hand, and the Underwriters
on the other, shall be deemed to be in the same respective proportions as the net proceeds (before deducting expenses) received
by the Company from the sale of the Public Units and the total underwriting discounts and commissions received by the Underwriters
in connection therewith, in each case as set forth in the table on the cover of the Prospectus, bear to the aggregate offering
price of the Public Units. The relative fault of the Company, on the one hand, and the Underwriters on the other, shall be determined
by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company or by the Underwriters and the parties’
relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.
(e) Limitation
on Liability. The Company and the Underwriters agree that it would not be just and equitable if contribution pursuant to paragraph
(d) above were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose)
or by any other method of allocation that does not take account of the equitable considerations referred to in paragraph (d)
above. The amount paid or payable by an Indemnified Person as a result of the losses, claims, damages and liabilities referred
to in paragraph (d) above shall be deemed to include, subject to the limitations set forth above, any legal or other expenses
incurred by such Indemnified Person in connection with any such action or claim. Notwithstanding the provisions of paragraphs (d)
and (e), in no event shall an Underwriter be required to contribute any amount in excess of the amount by which the total underwriting
discounts and commissions received by such Underwriter with respect to the Offering exceeds the amount of any damages that such
Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled
to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters’ obligations to
contribute pursuant to paragraphs (d) and (e) are several in proportion to their respective purchase obligations hereunder and
not joint.
(f) Non-Exclusive
Remedies. The remedies provided for in this Section 7 are not exclusive and shall not limit any rights or remedies
which may otherwise be available to any Indemnified Person under this Agreement, at law or in equity.
8.
Effectiveness of Agreement. This Agreement shall become effective as of the date first written above.
9. Termination.
This Agreement may be terminated in the absolute discretion of the Representatives, by notice to the Company, if after the execution
and delivery of this Agreement and on or prior to the Closing Date or, in the case of the Option Units, prior to the Additional
Closing Date (i) trading generally shall have been suspended or materially limited on or by any of the New York Stock Exchange
or The Nasdaq Stock Market; (ii) trading of any securities issued or guaranteed by the Company shall have been suspended on any
exchange or in any over-the-counter market; (iii) a general moratorium on commercial banking activities shall have been declared
by federal or New York State authorities; or (iv) there shall have occurred any outbreak or escalation of hostilities or any change
in financial markets or any calamity or crisis, either within or outside the United States, that, in the judgment of the Representatives,
is material and adverse and makes it impracticable or inadvisable to proceed with the Offering on the Closing Date or the Additional
Closing Date, as the case may be, on the terms and in the manner contemplated by this Agreement, the Pricing Disclosure Package
and the Prospectus.
10.
Defaulting Underwriter.
(a) If,
on the Closing Date or the Additional Closing Date, as the case may be, any Underwriter defaults on its obligation to purchase
the Public Units that it has agreed to purchase hereunder on such date, the non-defaulting Underwriters may in their discretion
arrange for the purchase of such Public Units by other persons satisfactory to the Company on the terms contained in this Agreement.
If, within 36 hours after any such default by any Underwriter, the non-defaulting Underwriters do not arrange for the purchase
of such Public Units, then the Company shall be entitled to a further period of 36 hours within which to procure other persons
satisfactory to the non-defaulting Underwriters to purchase such Public Units on such terms. If other persons become obligated
or agree to purchase the Public Units of a defaulting Underwriter, either the non-defaulting Underwriters or the Company may postpone
the Closing Date or the Additional Closing Date, as the case may be, for up to five full business days in order to effect any
changes that in the opinion of counsel for the Company or counsel for the Underwriters may be necessary in the Registration Statement
and the Prospectus or in any other document or arrangement, and the Company agrees to promptly prepare any amendment or supplement
to the Registration Statement and the Prospectus that effects any such changes. As used in this Agreement, the term “Underwriter”
includes, for all purposes of this Agreement unless the context otherwise requires, any person not listed in Schedule 1 hereto
that, pursuant to this Section 10, purchases Public Units that a defaulting Underwriter agreed but failed to purchase.
(b) If,
after giving effect to any arrangements for the purchase of the Public Units of a defaulting Underwriter or Underwriters by the
non-defaulting Underwriters and the Company as provided in paragraph (a) above, the aggregate number of Public Units that remain
unpurchased on the Closing Date or the Additional Closing Date, as the case may be, does not exceed 10% of the aggregate number
of Public Units to be purchased on such date, then the Company shall have the right to require each non-defaulting Underwriter
to purchase the number of Public Units that such Underwriter agreed to purchase hereunder on such date plus such Underwriter’s
pro rata share (based on the number of Public Units that such Underwriter agreed to purchase on such date) of the Public Units
of such defaulting Underwriter or Underwriters for which such arrangements have not been made.
(c) If,
after giving effect to any arrangements for the purchase of the Public Units of a defaulting Underwriter or Underwriters by the
non-defaulting Underwriters and the Company as provided in paragraph (a) above, the aggregate number of Public Units that remain
unpurchased on the Closing Date or the Additional Closing Date, as the case may be, exceeds 10% of the aggregate amount of Public
Units to be purchased on such date, or if the Company shall not exercise the right described in paragraph (b) above, then this
Agreement or, with respect to any Additional Closing Date, the obligation of the Underwriters to purchase Public Units on the
Additional Closing Date, as the case may be, shall terminate without liability on the part of the non-defaulting Underwriters.
Any termination of this Agreement pursuant to this Section 10 shall be without liability on the part of the Company, except that
the Company will continue to be liable for the payment of expenses as set forth in Section 11 hereof and except that the provisions
of Section 7 hereof shall not terminate and shall remain in effect.
(d) Nothing
contained herein shall relieve a defaulting Underwriter of any liability it may have to the Company or any non-defaulting Underwriter
for damages caused by its default.
11.
Payment of Expenses.
(a) Whether or not the transactions contemplated by this Agreement are consummated or this Agreement is terminated, the Company
will pay or cause to be paid all costs and expenses incident to the performance of its obligations hereunder, including without
limitation, (i) the costs incident to the authorization, issuance, sale, preparation and delivery of the Public Units and any taxes
payable in that connection; (ii) the costs incident to the preparation, printing and filing under the Securities Act of the Registration
Statement, the Preliminary Prospectus, any Pricing Disclosure Package and the Prospectus (including all exhibits, amendments and
supplements thereto) and the distribution thereof; (iii) the costs of reproducing and distributing each of the Transaction Documents;
(iv) the fees and expenses of the Company’s counsel and independent accountants; (v) the fees and expenses incurred in connection
with the registration or qualification and determination of eligibility for investment of the Public Units under the laws of such
jurisdictions as the Representative may designate and the preparation, printing and distribution of a Blue Sky Memorandum (including
the related fees and expenses of counsel for the Underwriters); (vi) the cost of preparing stock certificates; (vii) the costs
and charges of any transfer agent, trustee, warrant agent and registrar; (viii) all expenses and application fees incurred in connection
with any filing with, and clearance of the Offering by, FINRA (including the reasonable and documented fees and expenses of counsel
for the Underwriters relating to such filings up to $25,000); (ix) all expenses incurred by the Company in connection with any
“road show” presentation to potential investors; and (x) all expenses and application fees related to the listing of
the Public Units on the Exchange.
(b) If (i) this Agreement is terminated pursuant to Section 9 (other than clauses (iii) and (iv)), (ii) the Company
for any reason fails to tender the Public Units for delivery to the Underwriters or (iii) the Underwriters decline to purchase
the Public Units for any reason permitted under this Agreement, the Company agrees to reimburse the Underwriters for all out-of-pocket
costs and expenses (including the fees and expenses of their counsel) reasonably incurred by the Underwriters in connection with
this Agreement and the Offering.
12.
Persons Entitled to Benefit of Agreement. This Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and the officers and directors and any controlling persons referred to herein, and the affiliates
of each party referred to in Section 7 hereof. Nothing in this Agreement is intended or shall be construed to give
any other person any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision contained
herein. No purchaser of Public Units from any Underwriter shall be deemed to be a successor merely by reason of such purchase.
13.
Survival. The respective indemnities, rights of contribution, representations, warranties and agreements of the Company
and the Underwriters contained in this Agreement or made by or on behalf of the Company or the Underwriters pursuant to this Agreement
or any certificate delivered pursuant hereto shall survive the delivery of and payment for the Public Units and shall remain in
full force and effect, regardless of any termination of this Agreement or any investigation made by or on behalf of the Company
or the Underwriters or the directors, officers, controlling persons or affiliates referred to in Section 7 hereof.
14.
Certain Defined Terms. For purposes of this Agreement, (a) except where otherwise expressly provided, the term “affiliate”
has the meaning set forth in Rule 405 under the Securities Act; and (b) the term “business day” means any day other
than a day on which banks are permitted or required to be closed in New York City; and (c) the term “Liquidation” means
the distributions of the Trust Account to the Public Stockholders in connection with the redemption of the Common Stock held by
the Public Stockholders pursuant to the terms of the Company’s Amended and Restated Certificate of Incorporation, as amended,
if the Company fails to consummate a Business Combination with the time period provided therein.
15.
Compliance with USA Patriot Act. In accordance with the requirements of the USA Patriot Act (Title III of Pub. L.
107-56 (signed into law October 26, 2001)), the Underwriters are required to obtain, verify and record information that identifies
their respective clients, including the Company, which information may include the name and address of their respective clients,
as well as other information that will allow the Underwriters to properly identify their respective clients.
16.
Miscellaneous.
(a) Notices.
All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted
and confirmed by any standard form of telecommunication.
Notices to the Underwriters shall be given
to the Representatives at:
Cowen and Company, LLC
599 Lexington Avenue
New York, New York 10022
Attention: Head of Equity Capital Markets,
with a copy to the General Counsel, Investment Banking
Craig-Hallum Capital Group LLC
222 South 9th Street, Suite 350
Minneapolis, Minnesota 55402
Attention: General Counsel
with a copy to:
Greenberg Traurig, P.A.
333 S.E. 2nd Avenue
Miami, FL 33131
Attention: Alan Annex, Esq.
Win Rutherfurd, Esq.
Notices to the Company shall be given to
it at:
890 5th Avenue Partners, Inc.
14 Elm Place, Suite 206
Rye, New York 10580
Attention: Adam Rothstein, Executive Chairman
with a copy to:
BraunHagey & Borden LLP
351 California Street
San Francisco, California 94104
Attention: Daniel J. Harris, Esq.
Jason R. Sanderson, Esq.
(b) Governing
Law. This Agreement and any claim, controversy or dispute arising under or related to this Agreement shall be governed by
and construed in accordance with the laws of the State of New York.
(c) Submission
to Jurisdiction. Each party hereto hereby submits to the exclusive jurisdiction of the U.S. federal and New York state courts
in the Borough of Manhattan in The City of New York in any suit or proceeding arising out of or relating to this Agreement or
the transactions contemplated hereby. Each party hereto waives any objection which it may now or hereafter have to the laying
of venue of any such suit or proceeding in such courts. The Company agrees that final judgment in any such suit, action or proceeding
brought in such court shall be conclusive and binding upon the Company and may be enforced in any court to the jurisdiction of
which Company is subject by a suit upon such judgment.
(d) Waiver
of Jury Trial. EACH OF THE PARTIES HERETO HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY SUIT OR PROCEEDING ARISING OUT
OF OR RELATING TO THIS AGREEMENT.
(e) Recognition
of the U.S. Special Resolution Regimes.
(i)
In the event that any Underwriter that is a Covered Entity (as defined below) becomes subject to a proceeding under a U.S.
Special Resolution Regime (as defined below), the transfer from such Underwriter of this Agreement, and any interest and obligation
in or under this Agreement, will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution
Regime if this Agreement, and any such interest and obligation, were governed by the laws of the United States or a state of the
United States.
(ii)
In the event that any Underwriter that is a Covered Entity or a BHC Act Affiliate (as defined below) of such Underwriter
becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights (as defined below) under this Agreement
that may be exercised against such Underwriter are permitted to be exercised to no greater extent than such Default Rights could
be exercised under the U.S. Special Resolution Regime if this Agreement were governed by the laws of the United States or a state
of the United States.
As used in this Section
16(e):
“BHC Act Affiliate”
has the meaning assigned to the term “affiliate” in, and shall be interpreted in accordance with, 12 U.S.C. §
1841(k).
“Covered Entity”
means any of the following:
(i) a
“covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b);
(ii) a
“covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or
(iii) a
“covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).
“Default Right”
has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1,
as applicable.
“U.S. Special
Resolution Regime” means each of (i) the Federal Deposit Insurance Act and the regulations promulgated thereunder and
(ii) Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations promulgated thereunder.
(f)
Counterparts. This Agreement may be signed in counterparts (which may include counterparts delivered by any
standard form of telecommunication), each of which shall be an original and all of which together shall constitute one and the
same instrument. Counterparts may be delivered via facsimile, electronic mail (including any electronic signature covered by the
U.S. federal ESIGN Act of 2000, Uniform Electronic Transactions Act, the Electronic Signatures and Records Act or other applicable
law, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and
validly delivered and be valid and effective for all purposes.
(g)
Amendments or Waivers. No amendment or waiver of any provision of this Agreement, nor any consent or approval
to any departure therefrom, shall in any event be effective unless the same shall be in writing and signed by the parties hereto.
(h)
Headings. The headings herein are included for convenience of reference only and are not intended to be part
of, or to affect the meaning or interpretation of, this Agreement.
(i)
Integration. This Agreement supersedes all prior agreements and understandings (whether written or oral) between
the Company and the Underwriters, or any of them, with respect to the subject matter hereof.
[Signature page follows]
If the foregoing is
in accordance with your understanding, please indicate your acceptance of this Agreement by signing in the space provided below.
| |
Very truly yours,
890 5th Avenue
Partners, Inc. |
Accepted as of the date first written above,
for itself and on behalf of the several Underwriters
listed in Schedule 1 hereto,
COWEN AND COMPANY, LLC
Craig-Hallum Capital
Group LLC
[Signature Page to Underwriting Agreement]
SCHEDULE
1
| Underwriter | |
| Number
of Units | |
| Cowen and Company, LLC | |
| [·] | |
| Craig-Hallum Capital Group LLC | |
| [·] | |
| Total | |
| 25,000,000 | |
ANNEX A
The initial public
offering price per Public Unit for the Units is $10.00. The number of Units purchased by the Underwriters is 25,000,000. The Underwriters
have an option to purchase an additional 3,750,000 Units to cover over-allotments, if any.
ANNEX B
Written Testing-the-Waters Communications
Reference is made to the materials used
in the testing the waters presentation made to potential investors by the Company, to the extent such materials are deemed to be
a “written communication” within the meaning of Rule 405 under the Securities Act.
EXHIBIT
A
Form of Press Release
890 5th Avenue Partners, Inc.
[Date]
890 5th Avenue Partners, Inc. (“Company”)
announced today that Cowen and Company, LLC and Craig-Hallum Capital Group LLC, the joint book-running managers in the Company’s
recent public sale of units, are [waiving] [releasing] a lock-up restriction with respect to the Company’s [shares of Common
Stock] [Warrants] [Units] held by [certain officers or directors] [an officer or director] of the Company. The [waiver] [release]
will take effect on ____________, 2021, and the securities may be sold on or after such date.
This press release is not an offer for
sale of the securities in the United States or in any other jurisdiction where such offer is prohibited, and such securities may
not be offered or sold in the United States absent registration or an exemption from registration under the United States Securities
Act of 1933, as amended.
Exhibit 4.1
NUMBER UNITS
U-
SEE REVERSE FOR CERTAIN
DEFINITIONS
CUSIP
890 5TH AVENUE PARTNERS, INC.
UNITS CONSISTING OF ONE SHARE OF CLASS A
COMMON STOCK AND
ONE-THIRD OF ONE REDEEMABLE WARRANT TO
PURCHASE ONE SHARE OF CLASS A COMMON STOCK
THIS CERTIFIES THAT is
the owner of Units.
Each Unit (“Unit”) consists of one
(1) share of Class A common stock, par value $0.0001 per share (“Class A Common Stock”),
of 890 5th Avenue Partners, Inc., a Delaware corporation (the “Company”), and one-third (1/3) of one redeemable
warrant (the “Warrant”). Each Warrant entitles the holder to purchase one (1) share (subject to
adjustment) of Class A Common Stock of the Company for $11.50 per share (subject to adjustment). Each Warrant will become
exercisable on the later of (i) thirty (30) days after the Company’s completion of an initial merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses (each
a “Business Combination”), or (ii) twelve (12) months from the closing of the Company’s initial
public offering, and will expire unless exercised before 5:00 p.m., New York City Time, on the date that is five (5) years
after the date on which the Company completes its initial Business Combination, or earlier upon redemption or liquidation. The
Class A Common Stock and Warrants comprising the Units represented by this certificate are not transferable separately prior
to , 2021, unless Cowen and Company, LLC and
Craig-Hallum Capital Group, LLC elect to allow separate trading earlier, subject to the Company’s filing of a Current Report
on Form 8-K with the Securities and Exchange Commission containing an audited balance sheet reflecting the Company’s receipt
of the gross proceeds of its initial public offering and issuing a press release announcing when separate trading will begin. The
terms of the Warrants are governed by a Warrant Agreement, dated as of
, 2021, between the Company and Continental Stock Transfer & Trust Company, as Warrant Agent, and are subject to the terms
and provisions contained therein, all of which terms and provisions the holder of this certificate consents to by acceptance hereof.
Copies of the Warrant Agreement are on file at the office of the Warrant Agent at 1 State Street, 30th Floor, New York,
New York 10004, and are available to any Warrant holder on written request and without cost.
This certificate is not valid unless countersigned
by the Transfer Agent and Registrar of the Company.
This certificate shall be governed by and
construed in accordance with the internal laws of the State of New York.
Witness the facsimile signature of its
duly authorized officers.
| |
|
|
|
|
| Secretary |
|
|
|
Chief Executive Officer |
890 5TH AVENUE PARTNERS, INC.
The Company will furnish without charge
to each unitholder who so requests, a statement of the powers, designations, preferences and relative, participating, optional
or other special rights of each class of stock or series thereof of the Company and the qualifications, limitations, or restrictions
of such preferences and/or rights.
The following abbreviations, when used
in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable
laws or regulations:
| |
|
|
|
|
|
|
| TEN COM |
|
— as tenants in common |
|
UNIF GIFT MIN ACT— |
|
Custodian
(Cust) (Minor) |
| TEN ENT |
|
— as tenants by the entireties |
|
|
|
|
| |
|
|
|
|
|
Under Uniform Gifts to Minors |
| JT TEN |
|
— as joint tenants with right of survivorship and not as tenants in common |
|
|
|
Act _________________________________
(State)
|
Additional abbreviations may also be used
though not in the above list.
For value received, hereby
sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER
IDENTIFYING NUMBER OF ASSIGNEE
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS,
INCLUDING ZIP CODE, OF ASSIGNEE)
Units
represented by the within Certificate, and do hereby irrevocably constitute and appoint
Attorney to transfer
the said Units on the books of the within named Company with full power of substitution in the premises.
Dated
| |
|
Notice: |
|
The signature to this assignment must correspond with the name as written upon the face of the certificate in every particular, without alteration or enlargement or any change whatever. |
Signature(s) Guaranteed:
| |
|
|
| THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM, PURSUANT TO S.E.C. RULE 17Ad-15 (OR ANY SUCCESSOR RULE) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED). |
|
|
In each case, as more fully described in the Company’s
final prospectus dated , 2021,
the holder(s) of this certificate shall be entitled to receive a pro-rata portion of certain funds held in the trust account established
in connection with its initial public offering only in the event that (i) the Company redeems the shares of Class A Common
Stock sold in its initial public offering and liquidates because it does not consummate an initial business combination by ,
2023, (ii) the Company redeems the shares of Class A Common Stock sold in its initial public offering in connection with a
stockholder vote to amend the Company’s amended and restated certificate of incorporation to modify the substance or timing
of the Company’s obligation to redeem 100% of the Class A Common Stock if it does not consummate an initial business
combination by , 2023, or (iii) if
the holder(s) seek(s) to redeem for cash his, her or its respective shares of Class A Common Stock in connection with a tender
offer (or proxy solicitation, solely in the event the Company seeks stockholder approval of the proposed initial business combination)
setting forth the details of a proposed initial business combination. In no other circumstances shall the holder(s) have any right
or interest of any kind in or to the trust account.
Exhibit 4.4
WARRANT
AGREEMENT
THIS WARRANT AGREEMENT (this “Agreement”),
dated as of [●], 2021, is by and between 890 5th Avenue Partners, Inc., a Delaware corporation (the “Company”),
and Continental Stock Transfer & Trust Company, a New York limited purpose trust company, as warrant agent (the “Warrant
Agent” and, in its capacity as transfer agent, referred to herein as the “Transfer Agent”).
WHEREAS, on [●], 2021, the Company
entered into separate agreements with 200 Park Avenue Partners, LLC, a Delaware limited liability company (the “Sponsor”),
PA 2 Co-Investment LLC, a Delaware limited liability company (“Cowen Investments”), Craig-Hallum
Capital Group, a Minnesota limited liability company (“Craig-Hallum”), and certain of its affiliates
(collectively with Craig-Hallum, in such capacity, the “CH Subscribers”and collectively with Cowen Investments
and the Sponsor, the “Founders”), pursuant to which the Founders agreed to purchase an aggregate of
702,500 units (or 777,500 units if the Over-allotment Option (as defined below) in connection with the Company’s Offering
(as defined below) is exercised in full) (the “Private Placement Units”), each Private Placement Unit
comprised of one share of the Company’s Common Stock (as defined below) and one-third of one redeemable warrant (each whole
warrant, a “Private Placement Warrant”), bearing the legend set forth in Exhibit B hereto, in
a private placement transaction to occur simultaneously with the closing of the Offering (and the closing of the Over-allotment
Option, if applicable). Each Private Placement Warrant entitles the holder thereof to purchase one share of Common Stock (as defined
below) at a price of $11.50 per share, subject to adjustment as described herein;
WHEREAS, in order to finance the Company’s
transaction costs in connection with an intended initial merger, capital stock exchange, asset acquisition, stock purchase, reorganization
or similar business combination, involving the Company and one or more businesses (a “Business Combination”),
the Sponsor or certain of the Company’s advisors, officers and directors or affiliates of any of the foregoing may, but are
not obligated to, loan the Company funds as the Company may require, of which up to $1,500,000 of such loans made to the Company
may be convertible into units at a price of $10.00 per unit (the “Working Capital Units”), each Working
Capital Unit comprised of one share of the Company’s Common Stock and one-third of one redeemable warrant (the “Working
Capital Warrants”);
WHEREAS, the Company is engaged in an initial
public offering (the “Offering”) of units of the Company’s equity securities, each such unit comprised
of one share of Class A common stock of the Company, par value $0.0001 per share (“Common Stock”), and
one-third of one redeemable Public Warrant (as defined below) (the “Public Units” and together with the
Private Placement Units and the Working Capital Units, the “Units”) and, in connection therewith, has
determined to issue and deliver 8,333,333 warrants (or up to 9,583,333 warrants if the Over-allotment Option is exercised in
full) to public investors in the Offering (the “Public Warrants” and, together with the Private Placement
Warrants and the Working Capital Warrants, the “Warrants”). Each whole Warrant entitles the holder thereof
to purchase one share of Common Stock for $11.50 per share, subject to adjustment as described herein. Only whole Warrants are
exercisable. A holder of the Public Warrants will not be able to exercise any fraction of a Warrant;
WHEREAS, the Company has filed with the
Securities and Exchange Commission (the “Commission”) a registration statement on Form S-1 (File No.
333-251650) and a prospectus (the “Prospectus”), for the registration under the Securities Act of 1933,
as amended (the “Securities Act”), of the Public Units and the Public Warrants and the Common Stock included
in the Public Units;
WHEREAS, the Company desires the Warrant
Agent to act on behalf of the Company, and the Warrant Agent is willing to so act, in connection with the issuance, registration,
transfer, exchange, redemption and exercise of the Warrants;
WHEREAS, the Company desires to provide
for the form and provisions of the Warrants, the terms upon which they shall be issued and exercised, and the respective rights,
limitation of rights, and immunities of the Company, the Warrant Agent, and the holders of the Warrants; and
WHEREAS, all acts and things have been done
and performed which are necessary to make the Warrants, when executed on behalf of the Company and countersigned by or on behalf
of the Warrant Agent (if a physical certificate is issued), as provided herein, the valid, binding and legal obligations of the
Company, and to authorize the execution and delivery of this Agreement.
NOW, THEREFORE, in consideration of the
mutual agreements herein contained, the parties hereto agree as follows:
1. Appointment of Warrant Agent.
The Company hereby appoints the Warrant
Agent to act as agent for the Company for the Warrants, and the Warrant Agent hereby accepts such appointment and agrees to perform
the same in accordance with the terms and conditions set forth in this Agreement.
2. Warrants.
2.1 Form of Warrant. Each Warrant shall
initially be issued in registered form only.
2.2 Effect of Countersignature. If
a physical certificate is issued, unless and until countersigned by the Warrant Agent pursuant to this Agreement, a Warrant certificate
shall be invalid and of no effect and may not be exercised by the holder thereof.
2.3 Registration.
2.3.1 Warrant Register. The Warrant
Agent shall maintain books (the “Warrant Register”) for the registration of original issuance and the
registration of transfer of the Warrants. Upon the initial issuance of the Warrants in book entry form, the Warrant Agent shall
issue and register the Warrants in the names of the respective holders thereof in such denominations and otherwise in accordance
with instructions delivered to the Warrant Agent by the Company. Ownership of beneficial interests in the Public Warrants shall
be shown on, and the transfer of such ownership shall be effected through, records maintained by institutions that have accounts
with The Depository Trust Company (the “Depositary”) (such institution, with respect to a Warrant in
its account, a “Participant”).
If the Depositary subsequently ceases to
make its book-entry settlement system available for the Public Warrants, the Company may instruct the Warrant Agent regarding making
other arrangements for book-entry settlement. In the event that the Public Warrants are not eligible for, or it is no longer necessary
to have the Public Warrants available in, book-entry form, the Warrant Agent shall provide written instructions to the Depositary
to deliver to the Warrant Agent for cancellation each book-entry Public Warrant, and the Company shall instruct the Warrant Agent
to deliver to the Depositary definitive certificates in physical form evidencing such Warrants (“Definitive Warrant
Certificates”) which shall be in the form annexed hereto as Exhibit A.
Physical certificates, if issued, shall
be signed by, or bear the facsimile signature of, the Executive Chairman, the President, the Chief Executive Officer, the Chief
Financial Officer, the Vice President, the Secretary or other principal officer of the Company. In the event the person whose facsimile
signature has been placed upon any Warrant shall have ceased to serve in the capacity in which such person signed the Warrant before
such Warrant is issued, it may be issued with the same effect as if he or she had not ceased to be such at the date of issuance.
2.3.2 Registered Holder. Prior to
due presentment for registration of transfer of any Warrant, the Company and the Warrant Agent may deem and treat the person in
whose name such Warrant is registered in the Warrant Register (the “Registered Holder”) as the absolute
owner of such Warrant and of each Warrant represented thereby (notwithstanding any notation of ownership or other writing on any
physical certificate made by anyone other than the Company or the Warrant Agent), for the purpose of any exercise thereof, and
for all other purposes, and neither the Company nor the Warrant Agent shall be affected by any notice to the contrary.
2.4 Detachability of Warrants.
The Common Stock and Public Warrants comprising the Public Units shall begin separate trading on the 52nd day following the
date of the Prospectus or, if such 52nd day is not on a day, other than a Saturday, Sunday or federal holiday, on which banks
in New York City are generally open for normal business (a “Business Day”), then on the immediately
succeeding Business Day following such date, or earlier (the “Detachment Date”) with the consent of
Cowen and Company, LLC and Craig-Hallum, as representatives of the several underwriters (in such capacity, the
“Representatives”), but in no event shall the Common Stock and the Public Warrants comprising the
Public Units be separately traded until (A) the Company has filed a Current Report on Form 8-K with the Commission containing
an audited balance sheet reflecting the receipt by the Company of the gross proceeds of the Offering, including the proceeds
received by the Company from the exercise by the underwriters of their right to purchase additional Public Units in the
Offering (the “Over-allotment Option”), if the Over-allotment Option is exercised prior to the
filing of the Current Report on Form 8-K, and (B) the Company issues a press release announcing when such separate trading
shall begin.
2.5 No Fractional Warrants Other Than as
Part of Units. The Company shall not issue fractional Warrants other than as part of the Units, each of which is comprised
of one share of Common Stock and one-third of one Warrant. If, upon the detachment of Warrants from the Units or otherwise, a holder
of Warrants would be entitled to receive a fractional Warrant, the Company shall round down to the nearest whole number the number
of Warrants to be issued to such holder.
2.6 Private Placement Warrants;
Working Capital Warrants. The Private Placement Warrants and the Working Capital Warrants shall be identical to the
Public Warrants, except that so long as they are held by any of the Founders or their Permitted Transferees (as defined
below) or, in the case of the Working Capital Warrants, the initial holders thereof or their Permitted Transferees, the
Private Placement Warrants and the Working Capital Warrants: (i) may be exercised for cash or on a “cashless
basis,” pursuant to subsection 3.3.1(c) hereof, (ii) with respect to Private Placement Warrants held by Cowen
Investments and the CH Subscribers, will not be exercisable more than five years from the commencement of sales of the
Offering in accordance with FINRA Rule 5110(g)(8)(A) and will be subject to a 180-day lock-up from the commencement of sales
of the Offering in accordance with FINRA Rule 5110(e), (iii) including the shares of Common Stock issuable upon exercise of
the Private Placement Warrants or the Working Capital Warrants, may not be transferred, assigned or sold until the date that
is thirty (30) days after the completion by the Company of an initial Business Combination, and (iv) shall not be redeemable
by the Company; provided, however, that in the case of clause (iii), the Private Placement Warrants, the
Working Capital Warrants and any shares of Common Stock held by any of the Founders or their Permitted Transferees or, in the
case of the Working Capital Warrants, the initial holders thereof or their Permitted Transferees, that are issued upon
exercise of the Private Placement Warrants or Working Capital Warrants may be transferred by the holders thereof:
(a) to the Company’s officers or directors,
any affiliates or family members of any of the Company’s officers or directors, any affiliate of the Founders or any employees
of such affiliates, or to any member(s) of the Founders or any affiliates of such members;
(b) in the case of an individual, by gift
to a member of such individual’s immediate family or to a trust, the beneficiary of which is a member of such individual’s
immediate family, or an affiliate of such individual or to a charitable organization;
(c) in the case of an individual, by virtue
of the laws of descent and distribution upon death of such individual;
(d) in the case of an individual, pursuant
to a qualified domestic relations order;
(e) by private sales or transfers made in
connection with the consummation of an initial Business Combination at prices no greater than the price at which the securities
were originally purchased;
(f) in the event of the Company’s liquidation
prior to consummation of the Company’s initial Business Combination;
(g) by virtue of the laws of the State of
Delaware or any of the Founders’ limited liability company agreement upon dissolution of such Founder;
(h) as distributions to direct or indirect
members of the Founders;
(i) to the Company for no value for cancellation
in connection with the completion of its initial Business Combination; or
(j) in the event of the Company’s liquidation,
merger, capital stock exchange, reorganization or other similar transaction which results in all of the Company’s stockholders
having the right to exchange their shares of Common Stock for cash, securities or other property subsequent to the Company’s
completion of its initial Business Combination;
provided, however, that, in each case (except
for clauses (f), (i) or (j) or with the prior written consent of the Company) prior to such registration for transfer, the Warrant
Agent shall be presented with written documentation pursuant to which any such transferee (the “Permitted Transferees”)
must enter into a written agreement with the Company agreeing to be bound by the transfer restrictions in this Agreement.
3. Terms and Exercise of Warrants.
3.1 Warrant Price. Each Warrant shall
entitle the Registered Holder thereof, subject to the provisions of such Warrant and of this Agreement, to purchase from the Company
the number of shares of Common Stock stated therein, at the price of $11.50 per share, subject to the adjustments provided in Section
4 hereof and in the last sentence of this Section 3.1. The term “Warrant Price” as used in
this Agreement shall mean the price per share (including in cash or by payment of Warrants pursuant to a “cashless exercise,”
to the extent permitted hereunder) at which shares of Common Stock may be purchased at the time a Warrant is exercised. The Company
in its sole discretion may lower the Warrant Price (including by allowing “cashless exercise”) at any time prior to
the Expiration Date (as defined below) for a period of not less than twenty (20) Business Days, provided, that the Company shall
provide at least three (3) Business Days prior written notice of such reduction to Registered Holders of the Warrants and, provided
further that any such reduction shall be identical among all of the Warrants.
3.2 Duration of Warrants. A Warrant
may be exercised only during the period (the “Exercise Period”) (A) commencing on the later of: (i) the
date that is thirty (30) days after the first date on which the Company completes a Business Combination, and (ii) the date that
is twelve (12) months from the date of the closing of the Offering, and (B) terminating at 5:00 p.m., New York City time on the
earliest to occur of (x) the date that is five (5) years after the date on which the Company completes its initial Business Combination,
(y) the liquidation of the Company in accordance with the Company’s amended and restated certificate of incorporation, as
amended from time to time; provided, however, that the Private Placement Warrants issued to Cowen Investments and
the CH Subscribers will not be exercisable more than five years from the commencement of sales of the Offering in accordance with FINRA
Rule 5110(g)(8)(A), or (z) other than with respect to the Private Placement Warrants and Working Capital Warrants to the extent
then held by the Founders or their Permitted Transferees or, in the case of the Working Capital Warrants, the initial holders thereof
or their Permitted Transferees, the Redemption Date (as defined below) as provided in Section 6.3 hereof
(the “Expiration Date”); provided, however, that the exercise of any Warrant shall be subject
to the satisfaction of any applicable conditions, as set forth in subsection 3.3.2 below, with respect to an effective registration
statement or a valid exemption therefrom being available. Except with respect to the right to receive the Redemption Price (as
defined below) (other than with respect to a Private Placement Warrant or a Working Capital Warrant then held by any of the Founders
or their Permitted Transferees or, in the case of the Working Capital Warrants, the initial holders thereof or their Permitted
Transferees) in the event of a redemption (as set forth in Section 6 hereof), each Warrant (other than a Private Placement
Warrant or a Working Capital Warrant then held by any of the Founders or their Permitted Transferees in the event of a redemption
or, in the case of the Working Capital Warrants, the initial holders thereof or their Permitted Transferees) not exercised on or
before the Expiration Date shall become null and void, and all rights thereunder and all rights in respect thereof under this Agreement
shall cease at 5:00 p.m., New York City time, on the Expiration Date. The Company in its sole discretion may extend the duration
of the Warrants by delaying the Expiration Date; provided, that the Company shall provide at least twenty (20) days prior
written notice of any such extension to Registered Holders of the Warrants and, provided further that any such extension shall
be identical in duration among all the Warrants.
3.3 Exercise of Warrants.
3.3.1 Payment. Subject to the provisions
of the Warrant and this Agreement, a Warrant may be exercised by the Registered Holder thereof by delivering to the Warrant Agent
at its corporate trust department (i) the Definitive Warrant Certificate evidencing the Warrants to be exercised, or, in the case
of a Warrant represented by a book-entry, the Warrants to be exercised (the “Book-Entry Warrants”)
on the records of the Depositary to an account of the Warrant Agent at the Depositary designated for such purposes in writing by
the Warrant Agent to the Depositary from time to time, (ii) an election to purchase (“Election to Purchase”)
any share of Common Stock pursuant to the exercise of a Warrant, properly completed and executed by the Registered Holder on the
reverse of the Definitive Warrant Certificate or, in the case of a Book-Entry Warrant, properly delivered by the Participant in
accordance with the Depositary’s procedures, and (iii) the payment in full of the Warrant Price for each share of Common
Stock as to which the Warrant is exercised and any and all applicable taxes due in connection with the exercise of the Warrant,
the exchange of the Warrant for the shares of Common Stock and the issuance of such shares of Common Stock, as follows:
(a) in lawful money of the United States,
in good certified check or wire payable to the Warrant Agent;
(b) in the event of a redemption pursuant
to Section 6.1 hereof in which the Company’s board of directors (the “Board”) has elected
to require all holders of the Warrants to exercise such Warrants on a “cashless basis,” by surrendering the Warrants
for that number of shares of Common Stock equal to the lesser of (A) the quotient obtained by dividing (x) the product of
the number of shares of Common Stock underlying the Warrants, multiplied by the excess of the “Fair Market Value” (as
defined in this subsection 3.3.1(b)) over the Warrant Price by (y) the Fair Market Value and (B) 0.361. Solely for
purposes of this subsection 3.3.1(b), Section 6.2 and Section 6.4, the “Fair Market Value”
shall mean the average last reported sale price of the Common Stock for the ten (10) trading days ending on the third trading day
prior to the date on which the notice of redemption is sent to the holders of the Warrants, pursuant to Section 6 hereof;
(c) with respect to any Private Placement
Warrant or Working Capital Warrant, so long as such Private Placement Warrant or Working Capital Warrant is held by any of the
Founders or their Permitted Transferees or, in the case of the Working Capital Warrants, the initial holders thereof or their Permitted
Transferees, by surrendering the Warrants for that number of shares of Common Stock equal (i) if in connection with a redemption
of Private Placement Warrants or Working Capital Warrants pursuant to Section 6.2 hereof, as provided in Section 6.2
hereof with respect to a Make-Whole Exercise (as defined below) and (ii) in all other scenarios, to the quotient obtained by dividing
(x) the product of the number of shares of Common Stock underlying the Warrants, multiplied by the excess of the “Founder
Exercise Fair Market Value”, as defined in this subsection 3.3.1(c), over the Warrant Price by (y) the Founder Exercise
Fair Market Value. Solely for purposes of this subsection 3.3.1(c), the “Founder Exercise Fair Market Value”
shall mean the average last reported sale price of the Common Stock for the ten (10) trading days ending on the third trading day
prior to the date on which notice of exercise of the Private Placement Warrant or Working Capital Warrant is sent to the Warrant
Agent;
(d) on a cashless basis, as provided in Section
6.2 hereof with respect to a Make-Whole Exercise; or
(e) on a cashless basis, as provided in Section
7.4 hereof.
3.3.2 Issuance of Shares of Common
Stock upon Exercise. As soon as practicable after the exercise of any Warrant and the clearance of the funds in payment
of the Warrant Price (if payment is pursuant to subsection 3.3.1(a)), the Company shall issue to the Registered Holder
of such Warrant a book-entry position or certificate, as applicable, for the number of full shares of Common Stock to which
he, she or it is entitled, registered in such name or names as may be directed by him, her or it, and if such Warrant shall
not have been exercised in full, a new book-entry position or countersigned Warrant, as applicable, for the number of shares
of Common Stock as to which such Warrant shall not have been exercised. If fewer than all the Warrants evidenced by a book
entry position are exercised, a notation shall be made to the records maintained by the Depositary, its nominee for each book
entry position, or the applicable institution with an account at the Depositary, as appropriate, evidencing the balance of
the Warrants remaining after such exercise. Notwithstanding the foregoing, in no event will the Company be required to net
cash settle the Warrant exercise. Notwithstanding the foregoing, the Company shall not be obligated to deliver any shares of
Common Stock pursuant to the exercise of a Warrant and shall have no obligation to settle such Warrant exercise unless (a) a
registration statement under the Securities Act with respect to the shares of Common Stock underlying the Public Warrants is
then effective and (b) a prospectus relating thereto is current, subject to the Company’s satisfying its obligations
under Section 7.4 or a valid exemption from registration is available. No Warrant shall be exercisable and the Company
shall not be obligated to issue shares of Common Stock upon exercise of a Warrant unless the Common Stock issuable upon such
Warrant exercise has been registered, qualified or deemed to be exempt from registration or qualification under the
securities laws of the state of residence of the Registered Holder of the Warrants. The Company may require holders of Public
Warrants to settle the Warrant on a “cashless basis” pursuant to Section 7.4. If, by reason of any
exercise of Warrants on a “cashless basis”, the holder of any Warrant would be entitled, upon the exercise of
such Warrant, to receive a fractional interest in a share of Common Stock, the Company shall round down to the nearest whole
number, the number of shares of Common Stock to be issued to such holder.
3.3.3 Valid Issuance. All shares
of Common Stock issued upon the proper exercise of a Warrant in conformity with this Agreement shall be validly issued, fully paid
and non-assessable.
3.3.4 Date of Issuance. Each person
in whose name any book-entry position or certificate, as applicable, for shares of Common Stock is issued shall for all purposes
be deemed to have become the holder of record of such shares of Common Stock on the date on which the Warrant, or book-entry position
representing such Warrant, was surrendered and payment of the Warrant Price was made, irrespective of the date of delivery of such
certificate in the case of a certificated Warrant, except that, if the date of such surrender and payment is a date when the share
transfer books of the Company or book-entry system of the Warrant Agent are closed, such person shall be deemed to have become
the holder of such shares of Common Stock at the close of business on the next succeeding date on which the share transfer books
or book-entry system are open.
3.3.5 Maximum Percentage. A holder
of a Warrant may notify the Company in writing in the event he, she or it elects to be subject to the provisions contained in this
subsection 3.3.5; however, no holder of a Warrant shall be subject to this subsection 3.3.5 unless he, she
or it makes such election. If the election is made by a holder, the Warrant Agent shall not effect the exercise of the holder’s
Warrant, and such holder shall not have the right to exercise such Warrant, to the extent that after giving effect to such exercise,
such person (together with such person’s affiliates or any other person subject to aggregation with such person), to the
Warrant Agent’s actual knowledge, would beneficially own in excess of 9.8% (or such other amount as a holder may specify)
(the “Maximum Percentage”) of the shares of Common Stock outstanding immediately after giving effect
to such exercise. For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by
such person and his, her or its affiliates or any such other person or group shall include the number of shares of Common Stock
issuable upon exercise of the Warrant with respect to which the determination of such sentence is being made, but shall exclude
shares of Common Stock that would be issuable upon (x) exercise of the remaining, unexercised portion of the Warrant beneficially
owned by such person and his, her or its affiliates and (y) exercise or conversion of the unexercised or unconverted portion of
any other securities of the Company beneficially owned by such person and his, her or its affiliates (including, without limitation,
any convertible notes or convertible preferred stock or warrants) subject to a limitation on conversion or exercise analogous to
the limitation contained herein. Except as set forth in the preceding sentence, for purposes of this paragraph, beneficial ownership
shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”). For purposes of the Warrant, in determining the number of outstanding shares of Common Stock, the holder may
rely on the number of outstanding shares of Common Stock as reflected in (1) the Company’s most recent Annual Report on Form
10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or other public filing with the Commission as the case may be,
(2) a more recent public announcement by the Company or (3) any other notice by the Company or the Transfer Agent setting forth
the number of shares of Common Stock outstanding. For any reason at any time, upon the written request of the holder of the Warrant,
the Company shall, within two (2) Business Days, confirm orally and in writing to such holder the number of shares of Common Stock
then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the
conversion or exercise of equity securities of the Company by the holder and his, her or its affiliates since the date as of which
such number of outstanding shares of Common Stock was reported. By written notice to the Company, the holder of a Warrant may from
time to time increase or decrease the Maximum Percentage applicable to such holder to any other percentage specified in such notice;
provided, however, that any such increase shall not be effective until the sixty-first (61st) day after such notice
is delivered to the Company.
4. Adjustments.
4.1 Stock Dividends.
4.1.1 Split-Ups. If after the date
hereof, and subject to the provisions of Section 4.6 below, the number of outstanding shares of Common Stock is increased
by a stock capitalization or stock dividend payable in shares of Common Stock, or by a split-up of shares of Common Stock or other
similar event, then, on the effective date of such stock capitalization or stock dividend, split-up or similar event, the number
of shares of Common Stock issuable on exercise of each Warrant shall be increased in proportion to such increase in the outstanding
shares of Common Stock. A rights offering to holders of the Common Stock entitling holders to purchase shares of Common Stock at
a price less than the “Historical Fair Market Value” (as defined below) shall be deemed a stock dividend of a number
of shares of Common Stock equal to the product of (i) the number of shares of Common Stock actually sold in such rights offering
(or issuable under any other equity securities sold in such rights offering that are convertible into or exercisable for the Common
Stock) and (ii) one (1) minus the quotient of (x) the price per share of Common Stock paid in such rights offering divided by (y)
the Historical Fair Market Value. For purposes of this subsection 4.1.1, (i) if the rights offering is for securities convertible
into or exercisable for Common Stock, in determining the price payable for Common Stock, there shall be taken into account any
consideration received for such rights, as well as any additional amount payable upon exercise or conversion and (ii) “Historical
Fair Market Value” means the volume weighted average price of the Common Stock as reported during the ten (10) trading
day period ending on the trading day prior to the first date on which the shares of Common Stock trade on the applicable exchange
or in the applicable market, regular way, without the right to receive such rights. No shares of Common Stock shall be issued at
less than their par value.
4.1.2 Extraordinary Dividends. If
the Company, at any time while the Warrants are outstanding and unexpired, shall pay a dividend or make a distribution in cash,
securities or other assets to all or substantially all of the holders of the Common Stock on account of such shares of Common Stock
(or other shares of the Company’s capital stock into which the Warrants are convertible), other than (a) as described in
subsection 4.1.1 above, (b) Ordinary Cash Dividends (as defined below), (c) to satisfy the redemption rights of the holders
of the Common Stock in connection with a proposed initial Business Combination, (d) to satisfy the redemption rights of the holders
of Common Stock in connection with a stockholder vote to amend the Company’s amended and restated certificate of incorporation
to (i) modify the substance or timing of the Company’s obligation to allow redemption in connection with the Company’s
initial Business Combination or to redeem 100% of the shares of Common Stock included in the Units sold in the Offering if the
Company does not complete its initial Business Combination within the time period set forth in the Company’s amended and
restated certificate of incorporation, as amended from time to time or (ii) with respect to any other provision relating to stockholders’
rights or pre-initial Business Combination activity or (e) in connection with the redemption of the shares of Common Stock included
in the Units sold in the Offering upon the failure of the Company to complete its initial Business Combination and any subsequent
distribution of its assets upon its liquidation (any such non-excluded event being referred to herein as an “Extraordinary
Dividend”), then the Warrant Price shall be decreased, effective immediately after the effective date of such Extraordinary
Dividend, by the amount of cash and/or the fair market value (as determined by the Board in good faith) of any securities or other
assets paid on each share of Common Stock in respect of such Extraordinary Dividend. For purposes of this subsection 4.1.2,
“Ordinary Cash Dividends” means any cash dividend or cash distribution which, when combined on a per
share basis with the per share amounts of all other cash dividends and cash distributions paid on the Common Stock during the 365-day
period ending on the date of declaration of such dividend or distribution (as adjusted to appropriately reflect any of the events
referred to in other subsections of this Section 4 and excluding cash dividends or cash distributions that resulted in an
adjustment to the Warrant Price or to the number of shares of Common Stock issuable on exercise of each Warrant) does not exceed
$0.50 (being 5% of the offering price of the Units in the Offering). Solely for purposes of illustration, if the Company, at a
time while the Warrants are outstanding and unexpired, pays a cash dividend of $0.35 and previously paid an aggregate of $0.40
of cash dividends and cash distributions on the Common Stock during the 365-day period ending on the date of declaration of such
$0.35 dividend, then the Warrant Price will be decreased, effectively immediately after the effective date of such $0.35 dividend,
by $0.25 (the absolute value of the difference between $0.75 (the aggregate amount of all cash dividends and cash distributions
paid or made in such 365-day period, including such $0.35 dividend) and $0.50 (the greater of (x) $0.50 and (y) the aggregate amount
of all cash dividends and cash distributions paid or made in such 365-day period prior to such $0.35 dividend)).
4.2 Aggregation of Shares. If after
the date hereof, and subject to the provisions of Section 4.6 hereof, the number of outstanding shares of Common Stock is
decreased by a consolidation, combination, reverse stock split or reclassification of shares of Common Stock or other similar event,
then, on the effective date of such consolidation, combination, reverse stock split, reclassification or similar event, the number
of shares of Common Stock issuable on exercise of each Warrant shall be decreased in proportion to such decrease in outstanding
shares of Common Stock.
4.3 Adjustments in Exercise Price.
4.3.1 Whenever the number of shares of Common
Stock purchasable upon the exercise of the Warrants is adjusted as provided in Sections 4.1 and 4.2 above, the Warrant
Price shall be adjusted (to the nearest cent) by multiplying such Warrant Price immediately prior to such adjustment by a fraction
(x) the numerator of which shall be the number of shares of Common Stock purchasable upon the exercise of the Warrants immediately
prior to such adjustment, and (y) the denominator of which shall be the number of shares of Common Stock so purchasable immediately
thereafter.
4.3.2 If (x) the Company issues additional
shares of Common Stock or securities convertible into or exercisable or exchangeable for shares of Common Stock for capital raising
purposes in connection with the closing of its initial Business Combination at an issue price or effective issue price of less
than $9.20 per share of Common Stock (as adjusted for stock splits, stock dividends, rights issuances, subdivisions, reorganizations,
recapitalizations and the like), with such issue price or effective issue price to be determined in good faith by the Board (and
in the case of any such issuance to the Founders or their affiliates, without taking into account any shares of Class F common
stock of the Company, par value $0.0001 per share (the “Class F common stock”), held by the Founders
or their affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate
gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the
funding of an initial Business Combination on the date of the consummation of such initial Business Combination (net of redemptions),
and (z) the volume weighted average trading price of the Common Stock during the twenty (20) trading day period starting on the
trading day prior to the day on which the Company consummates an initial Business Combination (such price, the “Market
Value”) is below $9.20 per share (as adjusted for stock splits, stock dividends, rights issuances, subdivisions,
reorganizations, recapitalizations and the like), the Warrant Price will be adjusted (to the nearest cent) to be equal to 115%
of the higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger prices (as described
in Section 6.1) will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly
Issued Price.
4.4 Replacement of Securities upon Reorganization,
etc. In case of any reclassification or reorganization of the outstanding shares of Common Stock (other than a change under
Section 4.1 or Section 4.2 hereof or that solely affects the par value of such shares of Common Stock), or in the
case of any merger or consolidation of the Company with or into another entity or conversion of the Company as another entity
(other than a consolidation or merger in which the Company is the continuing corporation and that does not result in any reclassification
or reorganization of the outstanding shares of Common Stock), or in the case of any sale or conveyance to another corporation
or entity of the assets or other property of the Company as an entirety or substantially as an entirety in connection with which
the Company is dissolved, the holders of the Warrants shall thereafter have the right to purchase and receive, upon the basis
and upon the terms and conditions specified in the Warrants and in lieu of the shares of Common Stock of the Company immediately
theretofore purchasable and receivable upon the exercise of the rights represented thereby, the kind and amount of shares of stock
or other securities or property (including cash) receivable upon such reclassification, reorganization, merger or consolidation,
or upon a dissolution following any such sale or transfer, that the holder of the Warrants would have received if such holder
had exercised his, her or its Warrant(s) immediately prior to such event (the “Alternative Issuance”);
provided, however, that (i) if the holders of the Common Stock were entitled to exercise a right of election as
to the kind or amount of securities, cash or other assets receivable upon such consolidation or merger, then the kind and amount
of securities, cash or other assets constituting the Alternative Issuance for which each Warrant shall become exercisable shall
be deemed to be the weighted average of the kind and amount received per share by the holders of the Common Stock in such consolidation
or merger that affirmatively make such election, and (ii) if a tender, exchange or redemption offer shall have been made to and
accepted by the holders of the Common Stock (other than a tender, exchange or redemption offer made by the Company in connection
with redemption rights held by stockholders of the Company as provided for in the Company’s amended and restated certificate
of incorporation or as a result of the repurchase of shares of Common Stock by the Company if a proposed initial Business Combination
is presented to the stockholders of the Company for approval) under circumstances in which, upon completion of such tender or
exchange offer, the maker thereof, together with members of any group (within the meaning of Rule 13d-5(b)(1) under the Exchange
Act (or any successor rule)) of which such maker is a part, and together with any affiliate or associate of such maker (within
the meaning of Rule 12b-2 under the Exchange Act (or any successor rule)) and any members of any such group of which any such
affiliate or associate is a part, own beneficially (within the meaning of Rule 13d-3 under the Exchange Act (or any successor
rule)) more than 50% of the outstanding shares of Common Stock, the holder of a Warrant shall be entitled to receive as the Alternative
Issuance, the highest amount of cash, securities or other property to which such holder would actually have been entitled as a
stockholder if such Warrant holder had exercised the Warrant prior to the expiration of such tender or exchange offer, accepted
such offer and all of the Common Stock held by such holder had been purchased pursuant to such tender or exchange offer, subject
to adjustments (from and after the consummation of such tender or exchange offer) as nearly equivalent as possible to the adjustments
provided for in this Section 4; provided, further, that if less than 70% of the consideration receivable
by the holders of the Common Stock in the applicable event is payable in the form of common stock in the successor entity that
is listed for trading on a national securities exchange or is quoted in an established over-the-counter market, or is to be so
listed for trading or quoted immediately following such event, and if the Registered Holder properly exercises the Warrant within
thirty (30) days following the public disclosure of the consummation of such applicable event by the Company pursuant to a Current
Report on Form 8-K filed with the Commission, the Warrant Price shall be reduced by an amount (in dollars) (but in no event less
than zero) equal to the difference of (i) the Warrant Price in effect prior to such reduction minus (ii) (A) the Per Share Consideration
(as defined below) minus (B) the Black-Scholes Warrant Value (as defined below). The “Black-Scholes Warrant Value”
means the value of a Warrant immediately prior to the consummation of the applicable event based on the Black-Scholes Warrant
Model for a Capped American Call on Bloomberg Financial Markets (“Bloomberg”). For purposes of calculating
such amount, (1) Section 6 of this Agreement shall be taken into account, (2) the price of each share of Common Stock shall
be the volume weighted average price of the Common Stock as reported during the ten (10) trading day period ending on the trading
day prior to the effective date of the applicable event, (3) the assumed volatility shall be the 90 day volatility obtained from
the HVT function on Bloomberg determined as of the trading day immediately prior to the day of the announcement of the applicable
event, and (4) the assumed risk-free interest rate shall correspond to the U.S. Treasury rate for a period equal to the remaining
term of the Warrant. “Per Share Consideration” means (i) if the consideration paid to holders of the
Common Stock consists exclusively of cash, the amount of such cash per share of Common Stock, and (ii) in all other cases, the
volume weighted average price of the Common Stock as reported during the ten (10) trading day period ending on the trading day
prior to the effective date of the applicable event. If any reclassification or reorganization also results in a change in shares
of Common Stock covered by subsection 4.1.1, then such adjustment shall be made pursuant to subsection 4.1.1 or
Sections 4.2, 4.3 and this Section 4.4. The provisions of this Section 4.4 shall similarly apply
to successive reclassifications, reorganizations, mergers or consolidations, sales or other transfers. In no event will the Warrant
Price be reduced to less than the par value per share issuable upon exercise of the Warrant.
4.5 Notices of Changes in Warrant.
Upon every adjustment of the Warrant Price or the number of shares of Common Stock issuable upon exercise of a Warrant, the Company
shall give written notice thereof to the Warrant Agent, which notice shall state the Warrant Price resulting from such adjustment
and the increase or decrease, if any, in the number of shares of Common Stock purchasable at such price upon the exercise of a
Warrant, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. Upon
the occurrence of any event specified in Sections 4.1, 4.2, 4.3 or 4.4, the Company shall give written
notice of the occurrence of such event to each holder of a Warrant, at the last address set forth for such holder in the Warrant
Register, of the record date or the effective date of the event. Failure to give such notice, or any defect therein, shall not
affect the legality or validity of such event.
4.6 No Fractional Shares. Notwithstanding
any provision contained in this Agreement to the contrary, the Company shall not issue fractional shares of Common Stock upon the
exercise of Warrants. If, by reason of any adjustment made pursuant to this Section 4, the holder of any Warrant would be
entitled, upon the exercise of such Warrant, to receive a fractional interest in a share, the Company shall, upon such exercise,
round down to the nearest whole number the number of shares of Common Stock to be issued to such holder.
4.7 Form of Warrant. The form of
Warrant need not be changed because of any adjustment pursuant to this Section 4, and Warrants issued after such
adjustment may state the same Warrant Price and the same number of shares of Common Stock as is stated in the Warrants
initially issued pursuant to this Agreement; provided, however, that the Company may at any time in its sole discretion make
any change in the form of Warrant that the Company may deem appropriate and that does not affect the substance thereof, and
any Warrant thereafter issued or countersigned, whether in exchange or substitution for an outstanding Warrant or otherwise,
may be in the form as so changed.
4.8 Other Events. In case any event
shall occur affecting the Company as to which none of the provisions of the preceding subsections of this Section 4 are
strictly applicable, but which would require an adjustment to the terms of the Warrants in order to (i) avoid an adverse impact
on the Warrants and (ii) effectuate the intent and purpose of this Section 4, then, in each such case, the Company shall
appoint a firm of independent registered public accountants, investment banking or other appraisal firm of recognized national
standing, which shall give its opinion as to whether or not any adjustment to the rights represented by the Warrants is necessary
to effectuate the intent and purpose of this Section 4 and, if they determine that an adjustment is necessary, the terms
of such adjustment; provided, however, that under no circumstances shall the Warrants be adjusted pursuant to this
Section 4.8 as a result of any issuance of securities in connection with a Business Combination. The Company shall adjust
the terms of the Warrants in a manner that is consistent with any adjustment recommended in such opinion.
4.9 No Adjustment. For the avoidance
of doubt, no adjustment shall be made to the terms of the Warrants solely as a result of (i) any issuance of securities in connection
with a Business Combination or (ii) an adjustment to the conversion ratio of the Class F common stock into shares of Common Stock
or the conversion of the shares of Class F common stock into shares of Common Stock, in each case, pursuant to the Company’s
amended and restated certificate of incorporation, as further amended from time to time.
5. Transfer and Exchange of Warrants.
5.1 Registration of Transfer. The Warrant
Agent shall register the transfer, from time to time, of any outstanding Warrant upon the Warrant Register, upon surrender of such
Warrant for transfer, in the case of certificated Warrants, properly endorsed with signatures properly guaranteed and accompanied
by appropriate instructions for transfer. Upon any such transfer, a new Warrant representing an equal aggregate number of Warrants
shall be issued and the old Warrant shall be cancelled by the Warrant Agent. In the case of certificated Warrants, the Warrants
so cancelled shall be delivered by the Warrant Agent to the Company from time to time upon request.
5.2 Procedure for Surrender of Warrants.
Warrants may be surrendered to the Warrant Agent, together with a written request for exchange or transfer, and thereupon the Warrant
Agent shall issue in exchange therefor one or more new Warrants as requested by the Registered Holder of the Warrants so surrendered,
representing an equal aggregate number of Warrants; provided, however, that except as otherwise provided herein or with respect
to any Book-Entry Warrant, each Book-Entry Warrant may be transferred only in whole and only to the Depositary, to another nominee
of the Depositary, to a successor depository, or to a nominee of a successor depository; provided further, however that in the
event that a Warrant surrendered for transfer bears a restrictive legend (as in the case of the Private Placement Warrants), the
Warrant Agent shall not cancel such Warrant and issue new Warrants in exchange therefor until the Warrant Agent has received an
opinion of counsel for the Company stating that such transfer may be made and indicating whether the new Warrants must also bear
a restrictive legend.
5.3 Fractional Warrants. The Warrant
Agent shall not be required to effect any registration of transfer or exchange which shall result in the issuance of a warrant
certificate or book-entry position for a fraction of a warrant, except as part of the Units.
5.4 Service Charges. No service charge
shall be made for any exchange or registration of transfer of Warrants.
5.5 Warrant Execution and Countersignature.
The Warrant Agent is hereby authorized to countersign and to deliver, in accordance with the terms of this Agreement, the Warrants
required to be issued pursuant to the provisions of this Section 5, and the Company, whenever required by the Warrant Agent,
shall supply the Warrant Agent with Warrants duly executed on behalf of the Company for such purpose.
5.6 Transfer of Warrants. Prior to
the Detachment Date, the Public Warrants may be transferred or exchanged only together with the Unit in which such Warrant is included,
and only for the purpose of effecting, or in conjunction with, a transfer or exchange of such Unit. Furthermore, each transfer
of a Unit on the register relating to such Units shall operate also to transfer the Warrants included in such Unit. Notwithstanding
the foregoing, the provisions of this Section 5.6 shall have no effect on any transfer of Warrants on and after the Detachment
Date.
6. Redemption.
6.1 Redemption of Warrants When the Price
per Share of Common Stock Equals or Exceeds $18.00. Subject to Sections 6.5 and 6.6 hereof, not less than all
of the outstanding Warrants may be redeemed, at the option of the Company, at any time during the Exercise Period, at the office
of the Warrant Agent, upon notice to the Registered Holders of the Warrants, as described in Section 6.3 below, at a Redemption
Price of $0.01 per Warrant, provided that (a) the Reference Value (as defined below) equals or exceeds $18.00 per share (subject
to adjustment in compliance with Section 4 hereof) and (b) there is an effective registration statement covering the issuance
of the shares of Common Stock issuable upon exercise of the Warrants, and a current prospectus relating thereto, available throughout
the 30-day Redemption Period (as defined in Section 6.3 below) or the Company has elected to require the exercise of the
Warrants on a “cashless basis” pursuant to subsection 3.3.1.
6.2 Redemption of Warrants When the Price
per Share of Common Stock Equals or Exceeds $10.00. Subject to Sections 6.5 and 6.6 hereof, not less than all
of the outstanding Warrants may be redeemed, at the option of the Company, at any time during the Exercise Period, at the office
of the Warrant Agent, upon notice to the Registered Holders of the Warrants, as described in Section 6.3 below, at a Redemption
Price of $0.10 per Warrant, provided that (a) the Reference Value equals or exceeds $10.00 per share (subject to adjustment in
compliance with Section 4 hereof) and (b) there is an effective registration statement covering the issuance of the shares
of Common Stock issuable upon exercise of the Warrants, and a current prospectus relating thereto, available throughout the 30-day
Redemption Period (as defined in Section 6.3 below). During the 30-day Redemption Period in connection with a redemption
pursuant to this Section 6.2, Registered Holders of the Warrants may elect to exercise their Warrants on a “cashless
basis” pursuant to subsection 3.3.1 and receive a number of shares of Common Stock determined by reference to the
table below, based on the Redemption Date (calculated for purposes of the table as the period to expiration of the Warrants) and
the Fair Market Value (a “Make-Whole Exercise”).
| Redemption Date (period |
|
Fair Market Value of Our Common Stock |
|
| to expiration of warrants) |
|
≥$10.00 |
|
|
$11.00 |
|
|
$12.00 |
|
|
$13.00 |
|
|
$14.00 |
|
|
$15.00 |
|
|
$16.00 |
|
|
$17.00 |
|
|
≥$18.00 |
|
| 57 months |
|
|
0.257 |
|
|
|
0.277 |
|
|
|
0.294 |
|
|
|
0.310 |
|
|
|
0.324 |
|
|
|
0.337 |
|
|
|
0.348 |
|
|
|
0.358 |
|
|
|
0.361 |
|
| 54 months |
|
|
0.252 |
|
|
|
0.272 |
|
|
|
0.291 |
|
|
|
0.307 |
|
|
|
0.322 |
|
|
|
0.335 |
|
|
|
0.347 |
|
|
|
0.357 |
|
|
|
0.361 |
|
| 51 months |
|
|
0.246 |
|
|
|
0.268 |
|
|
|
0.287 |
|
|
|
0.304 |
|
|
|
0.320 |
|
|
|
0.333 |
|
|
|
0.346 |
|
|
|
0.357 |
|
|
|
0.361 |
|
| 48 months |
|
|
0.241 |
|
|
|
0.263 |
|
|
|
0.283 |
|
|
|
0.301 |
|
|
|
0.317 |
|
|
|
0.332 |
|
|
|
0.344 |
|
|
|
0.356 |
|
|
|
0.361 |
|
| 45 months |
|
|
0.235 |
|
|
|
0.258 |
|
|
|
0.279 |
|
|
|
0.298 |
|
|
|
0.315 |
|
|
|
0.330 |
|
|
|
0.343 |
|
|
|
0.356 |
|
|
|
0.361 |
|
| 42 months |
|
|
0.228 |
|
|
|
0.252 |
|
|
|
0.274 |
|
|
|
0.294 |
|
|
|
0.312 |
|
|
|
0.328 |
|
|
|
0.342 |
|
|
|
0.355 |
|
|
|
0.361 |
|
| 39 months |
|
|
0.221 |
|
|
|
0.246 |
|
|
|
0.269 |
|
|
|
0.290 |
|
|
|
0.309 |
|
|
|
0.325 |
|
|
|
0.340 |
|
|
|
0.354 |
|
|
|
0.361 |
|
| 36 months |
|
|
0.213 |
|
|
|
0.239 |
|
|
|
0.263 |
|
|
|
0.285 |
|
|
|
0.305 |
|
|
|
0.323 |
|
|
|
0.339 |
|
|
|
0.353 |
|
|
|
0.361 |
|
| 33 months |
|
|
0.205 |
|
|
|
0.232 |
|
|
|
0.257 |
|
|
|
0.280 |
|
|
|
0.301 |
|
|
|
0.320 |
|
|
|
0.337 |
|
|
|
0.352 |
|
|
|
0.361 |
|
| 30 months |
|
|
0.196 |
|
|
|
0.224 |
|
|
|
0.250 |
|
|
|
0.274 |
|
|
|
0.297 |
|
|
|
0.316 |
|
|
|
0.335 |
|
|
|
0.351 |
|
|
|
0.361 |
|
| 27 months |
|
|
0.185 |
|
|
|
0.214 |
|
|
|
0.242 |
|
|
|
0.268 |
|
|
|
0.291 |
|
|
|
0.313 |
|
|
|
0.332 |
|
|
|
0.350 |
|
|
|
0.361 |
|
| 24 months |
|
|
0.173 |
|
|
|
0.204 |
|
|
|
0.233 |
|
|
|
0.260 |
|
|
|
0.285 |
|
|
|
0.308 |
|
|
|
0.329 |
|
|
|
0.348 |
|
|
|
0.361 |
|
| 21 months |
|
|
0.161 |
|
|
|
0.193 |
|
|
|
0.223 |
|
|
|
0.252 |
|
|
|
0.279 |
|
|
|
0.304 |
|
|
|
0.326 |
|
|
|
0.347 |
|
|
|
0.361 |
|
| 18 months |
|
|
0.146 |
|
|
|
0.179 |
|
|
|
0.211 |
|
|
|
0.242 |
|
|
|
0.271 |
|
|
|
0.298 |
|
|
|
0.322 |
|
|
|
0.345 |
|
|
|
0.361 |
|
| 15 months |
|
|
0.130 |
|
|
|
0.164 |
|
|
|
0.197 |
|
|
|
0.230 |
|
|
|
0.262 |
|
|
|
0.291 |
|
|
|
0.317 |
|
|
|
0.342 |
|
|
|
0.361 |
|
| 12 months |
|
|
0.111 |
|
|
|
0.146 |
|
|
|
0.181 |
|
|
|
0.216 |
|
|
|
0.250 |
|
|
|
0.282 |
|
|
|
0.312 |
|
|
|
0.339 |
|
|
|
0.361 |
|
| 9 months |
|
|
0.090 |
|
|
|
0.125 |
|
|
|
0.162 |
|
|
|
0.199 |
|
|
|
0.237 |
|
|
|
0.272 |
|
|
|
0.305 |
|
|
|
0.336 |
|
|
|
0.361 |
|
| 6 months |
|
|
0.065 |
|
|
|
0.099 |
|
|
|
0.137 |
|
|
|
0.178 |
|
|
|
0.219 |
|
|
|
0.259 |
|
|
|
0.296 |
|
|
|
0.331 |
|
|
|
0.361 |
|
| 3 months |
|
|
0.034 |
|
|
|
0.065 |
|
|
|
0.104 |
|
|
|
0.150 |
|
|
|
0.197 |
|
|
|
0.243 |
|
|
|
0.286 |
|
|
|
0.326 |
|
|
|
0.361 |
|
| 0 months |
|
|
— |
|
|
|
— |
|
|
|
0.042 |
|
|
|
0.115 |
|
|
|
0.179 |
|
|
|
0.233 |
|
|
|
0.281 |
|
|
|
0.323 |
|
|
|
0.361 |
|
The exact Fair Market Value and Redemption
Date may not be set forth in the table above, in which case, if the Fair Market Value is between two values in the table or the
Redemption Date is between two redemption dates in the table, the number of shares of Common Stock to be issued for each Warrant
exercised in a Make-Whole Exercise will be determined by a straight-line interpolation between the number of shares set forth for
the higher and lower Fair Market Values and the earlier and later redemption dates, as applicable, based on a 365- or 366-day year,
as applicable.
The stock prices set forth in the column
headings of the table above shall be adjusted as of any date on which the number of shares issuable upon exercise of a Warrant
is adjusted pursuant to Section 4 hereof. In the event of a Warrant Price adjustment pursuant to Section 4.3.1, the
adjusted stock prices in the column headings shall equal the stock prices immediately prior to such adjustment, multiplied by a
fraction, the numerator of which is the number of shares deliverable upon exercise of a Warrant immediately prior to such adjustment
and the denominator of which is the number of shares deliverable upon exercise of a Warrant as so adjusted. The number of shares
in the table above shall be adjusted in the same manner and at the same time as the number of shares issuable upon exercise of
a Warrant. In no event will the number of shares issued in connection with a Make-Whole Exercise exceed 0.361 shares of Common
Stock per Warrant (subject to adjustment).
6.3 Date Fixed for, and Notice of, Redemption;
Redemption Price; Reference Value. In the event that the Company elects to redeem the Warrants, pursuant to Sections 6.1
or 6.2, the Company shall fix a date for the redemption (the “Redemption Date”). Notice of redemption
shall be mailed by first class mail, postage prepaid, by the Company not less than thirty (30) days prior to the Redemption Date
(the “30-day Redemption Period”) to the Registered Holders of the Warrants to be redeemed at their last
addresses as they shall appear on the registration books. Any notice mailed in the manner herein provided shall be conclusively
presumed to have been duly given whether or not the Registered Holder received such notice. As used in this Agreement, (a) “Redemption
Price” shall mean the price per Warrant at which any Warrants are redeemed pursuant to Sections 6.1 or 6.2
and (b) “Reference Value” shall mean the last reported sales price of the shares of Common Stock for
any twenty (20) trading days within the thirty (30) trading-day period ending on the third trading day prior to the date on which
notice of the redemption is given.
6.4 Exercise After Notice of Redemption.
The Warrants may be exercised, for cash (or on a “cashless basis” in accordance with subsection 3.3.1(b) or
Section 6.2 of this Agreement) at any time after notice of redemption shall have been given by the Company pursuant to Section
6.3 hereof and prior to the Redemption Date. In the event that the Company determines to require all holders of Warrants to
exercise their Warrants on a “cashless basis” pursuant to subsection 3.3.1, the notice of redemption shall contain
the information necessary to calculate the number of shares of Common Stock to be received upon exercise of the Warrants, including
the Fair Market Value (as such term is defined in subsection 3.3.1(b) hereof) in such case. On and after the Redemption
Date, the record holder of the Warrants shall have no further rights except to receive, upon surrender of the Warrants, the Redemption
Price.
6.5 Exclusion of Private Placement Warrants;
Working Capital Warrants. The Company agrees that the redemption rights provided in Sections 6.1 and 6.2 hereof
shall not apply to the Private Placement Warrants or the Working Capital Warrants if at the time of the redemption such Private
Placement Warrants or Working Capital Warrants continue to be held by the Founders or their Permitted Transferees or, in the case
of the Working Capital Warrants, the initial holders thereof or their Permitted Transferees. However, once such Private Placement
Warrants or Working Capital Warrants are transferred (other than to Permitted Transferees in accordance with Section 2.6
hereof), the Company may redeem the Private Placement Warrants and the Working Capital Warrants pursuant to Sections 6.1
or 6.2 hereof, provided that the criteria for redemption are met, including the opportunity of the holder of such Private
Placement Warrants or Working Capital Warrants to exercise the Private Placement Warrants or Working Capital Warrants prior to
redemption pursuant to Section 6.4 hereof. Private Placement Warrants that are transferred to persons other than Permitted
Transferees shall, upon such transfer, cease to be Private Placement Warrants and Working Capital Warrants that are transferred
to persons other than Permitted Transferees shall, upon such transfer, cease to be Private Placement Warrants and Working Capital
Warrants, and shall become Public Warrants under this Agreement, including for purposes of Section 9.8 hereof.
6.6 Public Warrants Held By the
Company’s Officers or Directors. The Company agrees that if Public Warrants are held by any of the Company’s
officers or directors, the Public Warrants held by such officers and directors will be subject to the redemption rights
provided in Section 6.2, except that such officers and directors shall only receive the “Public
Warrant Fair Market Value” for such Public Warrants so redeemed. “Public Warrant Fair Market
Value” in this Section 6.6 shall mean the last reported sale price of the Public Warrants on the
applicable Redemption Date.
7. Other Provisions Relating to Rights
of Holders of Warrants.
7.1 No Rights as Stockholder. A Warrant
does not entitle the Registered Holder thereof to any of the rights of a stockholder of the Company, including, without limitation,
the right to receive dividends, or other distributions, exercise any preemptive rights to vote or to consent or to receive notice
as a stockholder in respect of the meetings of stockholders or the election of directors of the Company or any other matter.
7.2 Lost, Stolen, Mutilated, or Destroyed
Warrants. If any Warrant is lost, stolen, mutilated, or destroyed, the Company and the Warrant Agent may on such terms as to
indemnity or otherwise as they may in their discretion impose (which shall, in the case of a mutilated Warrant, include the surrender
thereof), issue a new Warrant of like denomination, tenor, and date as the Warrant so lost, stolen, mutilated, or destroyed. Any
such new Warrant shall constitute a substitute contractual obligation of the Company, whether or not the allegedly lost, stolen,
mutilated, or destroyed Warrant shall be at any time enforceable by anyone.
7.3 Reservation of Common Stock. The
Company shall at all times reserve and keep available a number of its authorized but unissued shares of Common Stock that shall
be sufficient to permit the exercise in full of all outstanding Warrants issued pursuant to this Agreement.
7.4 Registration of Common Stock; Cashless
Exercise at Company’s Option.
7.4.1 Registration of the Common Stock.
The Company agrees that as soon as practicable, but in no event later than fifteen (15) Business Days after the closing of its
initial Business Combination, it shall use best efforts to file with the Commission a registration statement for the registration,
under the Securities Act, of the shares of Common Stock issuable upon exercise of the Warrants. The Company shall use best efforts
to cause the same to become effective and to maintain the effectiveness of such registration statement, and a current prospectus
relating thereto, until the expiration or redemption of the Warrants in accordance with the provisions of this Agreement. If any
such registration statement has not been declared effective by the sixtieth (60th) Business Day following the closing
of the Business Combination, holders of the Warrants shall have the right, during the period beginning on the sixty-first (61st)
Business Day after the closing of the Business Combination and ending upon such registration statement being declared effective
by the Commission, and during any other period when the Company shall fail to have maintained an effective registration statement
covering the shares of Common Stock issuable upon exercise of the Warrants, to exercise such Warrants on a “cashless basis,”
pursuant to subsection 3.3.1, by exchanging the Warrants (in accordance with Section 3(a)(9) of the Securities Act (or any
successor rule) or another exemption) for that number of shares of Common Stock equal to the lesser of (A) the quotient obtained
by dividing (x) the product of the number of shares of Common Stock underlying the Warrants, multiplied by the excess of the “Fair
Market Value” (as defined below) over the Warrant Price by (y) the Fair Market Value and (B) 0.361. Solely for purposes of
this subsection 7.4.1, “Fair Market Value” shall mean the volume-weighted average price of the
Common Stock as reported during the ten (10) trading day period ending on the trading day prior to the date that notice of exercise
is received by the Warrant Agent from the holder of such Warrants or his, her or its securities broker or intermediary. The date
that notice of cashless exercise is received by the Warrant Agent shall be conclusively determined by the Warrant Agent. In connection
with the “cashless exercise” of a Public Warrant, the Company shall, upon request, provide the Warrant Agent with an
opinion of counsel for the Company (which shall be an outside law firm with securities law experience) stating that (i) the exercise
of the Warrants on a cashless basis in accordance with this subsection 7.4.1 is not required to be registered under the
Securities Act and (ii) the shares of Common Stock issued upon such exercise shall be freely tradable under United States federal
securities laws by anyone who is not an affiliate (as such term is defined in Rule 144 under the Securities Act (or any successor
statute)) of the Company and, accordingly, shall not be required to bear a restrictive legend. Except as provided in subsection
7.4.2, for the avoidance of doubt, unless and until all of the Warrants have been exercised or have expired, the Company shall
continue to be obligated to comply with its registration obligations under the first three sentences of this subsection 7.4.1.
7.4.2 Cashless Exercise at Company’s
Option. If the Common Stock is at the time of any exercise of a Warrant not listed on a national securities exchange such that
it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act (or any successor
statute), the Company may, at its option, (i) require holders of Public Warrants who exercise Public Warrants to exercise such
Public Warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act (or any successor statute)
as described in subsection 7.4.1 and (ii) in the event the Company so elects, the Company shall (x) not be required to file
or maintain in effect a registration statement for the registration, under the Securities Act, of the Common Stock issuable upon
exercise of the Warrants, notwithstanding anything in this Agreement to the contrary and (y) use best efforts to register or qualify
for sale the Common Stock issuable upon exercise of the Public Warrant under applicable blue sky laws of the state of residence
of the exercising holder to the extent an exemption is not available.
8. Concerning the Warrant Agent and Other
Matters.
8.1 Payment of Taxes. The Company shall
from time to time promptly pay all taxes and charges that may be imposed upon the Company or the Warrant Agent in respect of the
issuance or delivery of shares of Common Stock upon the exercise of the Warrants, but the Company shall not be obligated to pay
any transfer taxes in respect of the Warrants or such shares of Common Stock.
8.2 Resignation, Consolidation, or Merger
of Warrant Agent.
8.2.1 Appointment of Successor Warrant
Agent. The Warrant Agent, or any successor to it hereafter appointed, may resign its duties and be discharged from all further
duties and liabilities hereunder after giving sixty (60) days’ notice in writing to the Company. If the office of the Warrant
Agent becomes vacant by resignation or incapacity to act or otherwise, the Company shall appoint in writing a successor Warrant
Agent in place of the Warrant Agent. If the Company shall fail to make such appointment within a period of thirty (30) days after
it has been notified in writing of such resignation or incapacity by the Warrant Agent or by the holder of a Warrant (who shall,
with such notice, submit his, her or its Warrant for inspection by the Company), then the holder of any Warrant may apply to the
Supreme Court of the State of New York for the County of New York for the appointment of a successor Warrant Agent at the Company’s
cost. Any successor Warrant Agent, whether appointed by the Company or by such court, shall be a corporation organized and existing
under the laws of the State of New York, in good standing and having its principal office in the Borough of Manhattan, City and
State of New York, and authorized under such laws to exercise corporate trust powers and subject to supervision or examination
by federal or state authority. After appointment, any successor Warrant Agent shall be vested with all the authority, powers, rights,
immunities, duties, and obligations of its predecessor Warrant Agent with like effect as if originally named as Warrant Agent hereunder,
without any further act or deed; but if for any reason it becomes necessary or appropriate, the predecessor Warrant Agent shall
execute and deliver, at the expense of the Company, an instrument transferring to such successor Warrant Agent all the authority,
powers, and rights of such predecessor Warrant Agent hereunder; and upon request of any successor Warrant Agent the Company shall
make, execute, acknowledge, and deliver any and all instruments in writing for more fully and effectually vesting in and confirming
to such successor Warrant Agent all such authority, powers, rights, immunities, duties, and obligations.
8.2.2 Notice of Successor Warrant Agent.
In the event a successor Warrant Agent shall be appointed, the Company shall give notice thereof to the predecessor Warrant Agent
and the Transfer Agent for the Common Stock not later than the effective date of any such appointment.
8.2.3 Merger or Consolidation of Warrant
Agent. Any corporation into which the Warrant Agent may be merged or with which it may be consolidated or any corporation resulting
from any merger or consolidation to which the Warrant Agent shall be a party shall be the successor Warrant Agent under this Agreement
without any further act.
8.3 Fees and Expenses of Warrant Agent.
8.3.1 Remuneration. The Company agrees
to pay the Warrant Agent reasonable remuneration for its services as such Warrant Agent hereunder and shall, pursuant to its obligations
under this Agreement, reimburse the Warrant Agent upon demand for all expenditures that the Warrant Agent may reasonably incur
in the execution of its duties hereunder.
8.3.2 Further Assurances. The Company
agrees to perform, execute, acknowledge, and deliver or cause to be performed, executed, acknowledged, and delivered all such further
and other acts, instruments, and assurances as may reasonably be required by the Warrant Agent for the carrying out or performing
of the provisions of this Agreement.
8.4 Liability of Warrant Agent.
8.4.1 Reliance on Company Statement.
Whenever in the performance of its duties under this Agreement, the Warrant Agent shall deem it necessary or desirable that any
fact or matter be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless
other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by
a statement signed by the President, the Chief Executive Officer, the Chief Financial Officer, the Vice President, the Secretary
or the Executive Chairman or the Chairman of the Board of the Company and delivered to the Warrant Agent. The Warrant Agent may
rely upon such statement for any action taken or suffered in good faith by it pursuant to the provisions of this Agreement.
8.4.2 Indemnity. The Warrant Agent
shall be liable hereunder only for its own gross negligence, willful misconduct, fraud or bad faith. The Company agrees to indemnify
the Warrant Agent and save it harmless against any and all liabilities, including judgments, out-of-pocket costs and reasonable
outside counsel fees, for anything done or omitted by the Warrant Agent in the execution of this Agreement, except as a result
of the Warrant Agent’s gross negligence, willful misconduct, fraud or bad faith.
8.4.3 Exclusions. The Warrant Agent
shall have no responsibility with respect to the validity of this Agreement or with respect to the validity or execution of any
Warrant (except its countersignature thereof). The Warrant Agent shall not be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Warrant. The Warrant Agent shall not be responsible to make any adjustments
required under the provisions of Section 4 hereof or responsible for the manner, method, or amount of any such adjustment
or the ascertaining of the existence of facts that would require any such adjustment; nor shall it by any act hereunder be deemed
to make any representation or warranty as to the authorization or reservation of any shares of Common Stock to be issued pursuant
to this Agreement or any Warrant or as to whether any shares of Common Stock shall, when issued, be valid and fully paid and non-assessable.
8.5 Acceptance of Agency. The Warrant
Agent hereby accepts the agency established by this Agreement and agrees to perform the same upon the terms and conditions herein
set forth and among other things, shall account promptly to the Company with respect to Warrants exercised and concurrently account
for, and pay to the Company, all monies received by the Warrant Agent for the purchase of shares of Common Stock through the exercise
of the Warrants.
8.6 Waiver. The Warrant Agent has no
right of set-off or any other right, title, interest or claim of any kind (“Claim”) in, or to any distribution
of, the Trust Account (as defined in that certain Investment Management Trust Agreement, dated as of the date hereof, by and between
the Company and the Warrant Agent as trustee thereunder) and hereby agrees not to seek recourse, reimbursement, payment or satisfaction
for any Claim against the Trust Account for any reason whatsoever. The Warrant Agent hereby waives any and all Claims against the
Trust Account and any and all rights to seek access to the Trust Account.
9. Miscellaneous Provisions.
9.1 Successors. All the covenants and
provisions of this Agreement by or for the benefit of the Company or the Warrant Agent shall bind and inure to the benefit of their
respective successors and assigns.
9.2 Notices. Any notice, statement
or demand authorized by this Agreement to be given or made by the Warrant Agent or by the holder of any Warrant to or on the Company
shall be sufficiently given when so delivered if by hand or overnight delivery or if sent by certified mail or private courier
service within five (5) days after deposit of such notice, postage prepaid, addressed (until another address is filed in writing
by the Company with the Warrant Agent), as follows:
890 5th Avenue Partners, Inc.
14 Elm Place, Suite 206
Rye, NY 10580
| |
Attn: |
Adam Rothstein |
| |
Email: |
[●] |
Any notice, statement or demand authorized by this Agreement
to be given or made by the holder of any Warrant or by the Company to or on the Warrant Agent shall be sufficiently given when
so delivered if by hand or overnight delivery or if sent by certified mail or private courier service within five (5) days after
deposit of such notice, postage prepaid, addressed (until another address is filed in writing by the Warrant Agent with the Company),
as follows:
Continental Stock Transfer & Trust Company
1 State Street, 30th Floor
New York, NY 10004
| |
Attn: |
Compliance Department |
With a copy in each case to:
BraunHagey & Borden LLP
351 California Street, 10th Floor
San Francisco, CA 94104
| |
Attn: |
Daniel J. Harris, Esq. and Jason R. Sanderson, Esq. |
| |
Email: |
harris@braunhagey.com and sanderson@braunhagey.com |
and
Greenberg Traurig, P.A.
333 S.E. 2nd Avenue
Miami, FL 33131
| |
Attn: |
Alan I. Annex, Esq. and Jason T. Simon, Esq. |
| |
Email: |
annexa@gtlaw.com and simonj@gtlaw.com |
9.3 Applicable Law; Forum. The validity,
interpretation, and performance of this Agreement and of the Warrants shall be governed in all respects by the laws of the
State of New York, without giving effect to conflicts of law principles that would result in the application of the
substantive laws of another jurisdiction. The Company hereby agrees that any action, proceeding or claim against it arising
out of or relating in any way to this Agreement shall be brought and enforced in the courts of the State of New York or the
United States District Court for the Southern District of New York, and irrevocably submits to such jurisdiction, which
jurisdiction shall be exclusive forum for any such action, proceeding or claim. The Company hereby waives any objection to
such jurisdiction and that such courts represent an inconvenient forum. Notwithstanding the foregoing, this Section 9.3 shall not apply to actions brought to enforce any liability or duty created by the Exchange
Act or any other claim for which the federal district courts of the United States of America are the sole and exclusive forum.
9.4 Persons Having Rights under this Agreement.
Nothing in this Agreement shall be construed to confer upon, or give to, any person or corporation other than the parties hereto
and the Registered Holders of the Warrants any right, remedy, or claim under or by reason of this Agreement or of any covenant,
condition, stipulation, promise, or agreement hereof. The Representatives shall be deemed to be a third-party beneficiary of this
Agreement with respect to Sections 7.4.1, 9.4 and 9.8 hereof. All covenants, conditions, stipulations, promises,
and agreements contained in this Agreement shall be for the sole and exclusive benefit of the parties hereto (and the Representatives
with respect to Sections 7.4.1, 9.4 and 9.8 hereof) and their successors and assigns and of the Registered
Holders of the Warrants.
9.5 Examination of the Warrant
Agreement. A copy of this Agreement shall be available at all reasonable times at the office of the Warrant Agent in the
Borough of Manhattan, City and State of New York, for inspection by the Registered Holder of any Warrant. The Warrant Agent
may require any such holder to submit such holder’s Warrant for inspection by the Warrant Agent.
9.6 Counterparts; Electronic Signatures.
This Agreement may be executed in any number of original or facsimile counterparts and each of such counterparts shall for all
purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. A signature
to this Agreement transmitted electronically shall have the same authority, effect, and enforceability as an original signature.
9.7 Effect of Headings. The section
headings herein are for convenience only and are not part of this Agreement and shall not affect the interpretation thereof.
9.8 Amendments. This Agreement may
be amended by the parties hereto without the consent of any Registered Holder (i) for the purpose of curing any ambiguity or to
correct any mistake, including to conform the provisions hereof to the description of the terms of the Warrants and this Agreement
set forth in the Prospectus, or curing, correcting or supplementing any defective provision contained herein or adding or changing
any other provisions with respect to matters or questions arising under this Agreement as the parties may deem necessary or desirable
and that the parties deem shall not adversely affect the interest of the Registered Holders, and (ii) to provide for the delivery
of Alternative Issuance pursuant to Section 4.4. All other modifications or amendments, including any amendment to increase
the Warrant Price or shorten the Exercise Period and any amendments to the terms of only the Private Placement Warrants or Working
Capital Warrants, shall require the vote or written consent of the Registered Holders of 65% of the then outstanding Public Warrants
and, solely with respect to any amendment to the terms of the Private Placement Warrants or Working Capital Warrants or any provision
of this Agreement with respect to the Private Placement Warrants or Working Capital Warrants, 50% of the then-outstanding Private
Placement Warrants or Working Capital Warrants, respectively. Notwithstanding the foregoing, the Company may lower the Warrant
Price or extend the duration of the Exercise Period pursuant to Sections 3.1 and 3.2, respectively, without the consent
of the Registered Holders.
9.9 Severability. This Agreement shall
be deemed severable, and the invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability
of this Agreement or of any other term or provision hereof. Furthermore, in lieu of any such invalid or unenforceable term or provision,
the parties hereto intend that there shall be added as a part of this Agreement a provision as similar in terms to such invalid
or unenforceable provision as may be possible and be valid and enforceable.
9.10 Business Continuity Plan. The
Warrant Agent shall maintain plans for business continuity, disaster recovery, and backup capabilities and facilities designed
to ensure the Warrant Agent’s continued performance of its obligations under this Agreement, including, without limitation,
loss of production, loss of systems, loss of equipment, failure of carriers and the failure of the Warrant Agent’s or its
supplier’s equipment, computer systems or business systems (“Business Continuity Plan”). Such Business
Continuity Plan shall include, but shall not be limited to, testing, accountability and corrective actions designed to be promptly
implemented, if necessary. In addition, in the event that the Warrant Agent has knowledge of an incident affecting the integrity
or availability of such Business Continuity Plan, then the Warrant Agent shall, as promptly as practicable, but no later than twenty-four
(24) hours (or sooner to the extent required by applicable law or regulation) after the Warrant Agent becomes aware of such incident,
notify the Company in writing of such incident and provide the Company with updates, as deemed appropriate by the Warrant Agent
under the circumstances, with respect to the status of all related remediation efforts in connection with such incident. The Warrant
Agent represents that, as of the date of this Agreement, such Business Continuity Plan is active and functioning normally in all
material respects.
9.11 Confidentiality. The Warrant Agent
and the Company agree that all books, records, information and data pertaining to the business of the other party, including inter
alia, personal, non-public warrant holder information, which are exchanged or received pursuant to the negotiation or the carrying
out of this Warrant Agreement, including the fees for services, shall remain confidential, and shall not be voluntarily disclosed
to any other person, except as may be required by law or regulation, including, without limitation, pursuant to requests from the
Securities and Exchange Commission and subpoenas from state or federal government authorities (e.g., in divorce and criminal actions).
Exhibit A – Form of Warrant Certificate
Exhibit B – Legend
[Signature Page Follows]
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed as of the date first above written.
| |
890 5TH AVENUE PARTNERS, INC. |
| |
|
|
| |
By: |
|
| |
Name: |
Adam Rothstein |
| |
Title: |
Executive Chairman |
| |
|
| |
CONTINENTAL STOCK TRANSFER & TRUST COMPANY, as Warrant Agent |
| |
|
|
| |
By: |
|
| |
Name: |
|
| |
Title: |
|
[Signature Page to Warrant Agreement]
EXHIBIT
A
Form of Warrant Certificate
[FACE]
Number
Warrants
THIS WARRANT SHALL BE NULL AND VOID IF
NOT EXERCISED PRIOR TO
THE EXPIRATION OF THE EXERCISE PERIOD PROVIDED FOR
IN THE WARRANT AGREEMENT DESCRIBED BELOW
890 5th Avenue Partners, Inc.
Incorporated Under the Laws of the State of Delaware
CUSIP [●]
Warrant Certificate
This Warrant Certificate certifies that
,
or registered assigns, is the registered holder of
warrant(s) evidenced hereby (the “Warrants” and each, a “Warrant”) to purchase shares of
Class A common stock, $0.0001 par value per share (“Common Stock”), of 890 5th Avenue Partners, Inc., a Delaware
corporation (the “Company”). Each Warrant entitles the holder, upon exercise during the period set forth in
the Warrant Agreement referred to below, to receive from the Company that number of fully paid and non-assessable shares of Common
Stock as set forth below, at the exercise price (the “Exercise Price”) as determined pursuant to the Warrant
Agreement, payable in lawful money (or through “cashless exercise” as provided for in the Warrant Agreement) of the
United States of America upon surrender of this Warrant Certificate and payment of the Exercise Price at the office or agency of
the Warrant Agent referred to below, subject to the conditions set forth herein and in the Warrant Agreement. Defined terms used
in this Warrant Certificate but not defined herein shall have the meanings given to them in the Warrant Agreement.
Each whole Warrant is initially exercisable
for one fully paid and non-assessable share of Common Stock. No fractional shares will be issued upon exercise of any Warrant.
If, upon the exercise of Warrant, a holder would be entitled to receive a fractional interest in a share, the Company will, upon
exercise, round down to the nearest whole number of the number of shares of Common Stock to be issued to the holder. The number
of shares of Common Stock issuable upon exercise of the Warrants is subject to adjustment upon the occurrence of certain events
as set forth in the Warrant Agreement.
The initial Exercise Price per share of
Common Stock for any Warrant is equal to $11.50 per whole share. The Exercise Price is subject to adjustment upon the occurrence
of certain events as set forth in the Warrant Agreement.
Subject to the conditions set forth in the
Warrant Agreement, the Warrants may be exercised only during the Exercise Period and to the extent not exercised by the end of
such Exercise Period, such Warrants shall become null and void.
Reference is hereby made to the further
provisions of this Warrant Certificate set forth on the reverse hereof and such further provisions shall for all purposes have
the same effect as though fully set forth at this place.
This Warrant Certificate shall not be valid
unless countersigned by the Warrant Agent, as such term is used in the Warrant Agreement.
This Warrant Certificate shall be governed
by and construed in accordance with the internal laws of the State of New York.
| |
890 5TH AVENUE PARTNERS, INC. |
| |
|
|
| |
By: |
|
| |
|
Name: |
Adam Rothstein |
| |
|
Title: |
Executive Chairman |
| |
|
|
| |
CONTINENTAL STOCK TRANSFER & TRUST COMPANY, AS WARRANT AGENT |
| |
|
|
| |
By: |
|
| |
|
Name: |
|
| |
|
Title: |
|
[Form of Warrant Certificate]
[Reverse]
The Warrants evidenced by this Warrant Certificate
are part of a duly authorized issue of Warrants entitling the holder on exercise to receive
shares of Common Stock and are issued or to be issued pursuant to a Warrant Agreement dated as of [●], 2021 (the “Warrant
Agreement”), duly executed and delivered by the Company to Continental Stock Transfer & Trust Company, a New York
limited purpose trust company, as warrant agent (or successor warrant agent) (collectively, the “Warrant Agent”),
which Warrant Agreement is hereby incorporated by reference in and made a part of this instrument and is hereby referred to for
a description of the rights, limitation of rights, obligations, duties and immunities thereunder of the Warrant Agent, the Company
and the holders (the words “holders” or “holder” meaning the Registered Holders or Registered
Holder, respectively) of the Warrants. A copy of the Warrant Agreement may be obtained by the holder hereof upon written request
to the Company. Defined terms used in this Warrant Certificate but not defined herein shall have the meanings given to them in
the Warrant Agreement.
Warrants may be exercised at any time during
the Exercise Period set forth in the Warrant Agreement. The holder of Warrants evidenced by this Warrant Certificate may exercise
them by surrendering this Warrant Certificate, with the form of Election to Purchase set forth hereon properly completed and executed,
together with payment of the Exercise Price as specified in the Warrant Agreement (or through “cashless exercise” as
provided for in the Warrant Agreement) at the designated office(s) of the Warrant Agent. In the event that upon any exercise of
Warrants evidenced hereby the number of Warrants exercised shall be less than the total number of Warrants evidenced hereby, there
shall be issued to the holder hereof or his, her or its assignee, a new Warrant Certificate evidencing the number of Warrants not
exercised.
Notwithstanding anything else in this Warrant
Certificate or the Warrant Agreement, no Warrant may be exercised unless at the time of exercise (i) a registration statement
covering the shares of Common Stock to be issued upon exercise is effective under the Securities Act and (ii) a prospectus
thereunder relating to the shares of Common Stock is current, except through “cashless exercise” as provided for in
the Warrant Agreement.
The Warrant Agreement provides that upon
the occurrence of certain events the number of shares of Common Stock issuable upon exercise of the Warrants set forth on the face
hereof may, subject to certain conditions, be adjusted. If, upon exercise of a Warrant, the holder thereof would be entitled to
receive a fractional interest in a share of Common Stock, the Company shall, upon exercise, round down to the nearest whole number
of shares of Common Stock to be issued to the holder of the Warrant.
Warrant Certificates, when surrendered at
the designated office(s) of the Warrant Agent by the Registered Holder thereof in person or by legal representative or attorney
duly authorized in writing, may be exchanged, in the manner and subject to the limitations provided in the Warrant Agreement, but
without payment of any service charge, for another Warrant Certificate or Warrant Certificates of like tenor evidencing in the
aggregate a like number of Warrants.
Upon due presentation for registration of
transfer of this Warrant Certificate at the office(s) of the Warrant Agent a new Warrant Certificate or Warrant Certificates of
like tenor and evidencing in the aggregate a like number of Warrants shall be issued to the transferee(s) in exchange for this
Warrant Certificate, subject to the limitations provided in the Warrant Agreement, without charge except for any tax or other third-party
charges imposed in connection therewith.
The Company and the Warrant Agent may deem
and treat the Registered Holder(s) hereof as the absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any exercise hereof, of any distribution to the holder(s)
hereof, and for all other purposes, and neither the Company nor the Warrant Agent shall be affected by any notice to the contrary.
Neither the Warrants nor this Warrant Certificate entitles any holder hereof to any rights of a stockholder of the Company.
Election to Purchase
(To Be Executed Upon Exercise of Warrant)
The undersigned hereby irrevocably elects
to exercise the right, represented by this Warrant Certificate, to receive
shares of Common Stock and herewith tenders payment for such shares of Common Stock to the order of 890 5th Avenue Partners, Inc.
(the “Company”) in the amount of $
in accordance with the terms hereof. The undersigned requests that a certificate for such shares of Common Stock be registered
in the name of , whose address
is and that such shares of Common
Stock be delivered to whose address is .
If said number of shares of Common Stock is less than all of the shares of Common Stock purchasable hereunder, the undersigned
requests that a new Warrant Certificate representing the remaining balance of such shares of Common Stock be registered in the
name of , whose address is ,
and that such Warrant Certificate be delivered to ,
whose address is .
In the event that the Warrant has been called
for redemption by the Company pursuant to Section 6.1 or Section 6.2 of the Warrant Agreement and the Company
has required cashless exercise pursuant to Section 6.4 of the Warrant Agreement, the number of shares of Common Stock
that this Warrant is exercisable for shall be determined in accordance with subsection 3.3.1(b) and Section 6.4
of the Warrant Agreement.
In the event that the Warrant is a Private
Placement Warrant that is to be exercised on a “cashless” basis pursuant to subsection 3.3.1(c) of the Warrant
Agreement, the number of shares of Common Stock that this Warrant is exercisable for shall be determined in accordance with subsection
3.3.1(c) of the Warrant Agreement.
In the event that the Warrant is to be exercised
on a “cashless” basis pursuant to Section 7.4 of the Warrant Agreement, the number of shares of Common
Stock that this Warrant is exercisable for shall be determined in accordance with Section 7.4 of the Warrant Agreement.
In the event that the Warrant may be exercised,
to the extent allowed by the Warrant Agreement, through cashless exercise (i) the number of shares of Common Stock that this
Warrant is exercisable for would be determined in accordance with the relevant section of the Warrant Agreement which allows for
such cashless exercise and (ii) the holder hereof shall complete the following: The undersigned hereby irrevocably elects
to exercise the right, represented by this Warrant Certificate, through the cashless exercise provisions of the Warrant Agreement,
to receive shares of Common Stock. If said number of shares of Common Stock is less than all of the shares of Common Stock purchasable
hereunder (after giving effect to the cashless exercise), the undersigned requests that a new Warrant Certificate representing
the remaining balance of such shares of Common Stock be registered in the name of ,
whose address is , and that such
Warrant Certificate be delivered to ,
whose address is .
| Date: , |
|
(Signature) |
| |
|
|
|
| |
|
(Address) |
| |
|
|
|
| |
|
|
(Tax Identification Number) |
| |
|
|
|
| Signature Guaranteed: |
|
|
|
| |
|
|
|
| |
|
|
|
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR
INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE
MEDALLION PROGRAM, PURSUANT TO SEC RULE 17Ad-15 (OR ANY SUCCESSOR RULE) under the SECURITIES
exchange act, OF 1934, AS AMENDED).
EXHIBIT
B
LEGEND
“THE SECURITIES REPRESENTED HEREBY
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE. IN ADDITION, SUBJECT TO ANY ADDITIONAL
LIMITATIONS ON TRANSFER DESCRIBED IN THE LETTER AGREEMENT BY AND AMONG 890 5TH AVENUE PARTNERS, INC. (THE “COMPANY”),
200 PARK AVENUE PARTNERS, LLC, PA CO-INVESTMENT LLC, CRAIG-HALLUM CAPITAL GROUP LLC AND THE OTHER PARTIES THERETO, THE SECURITIES
REPRESENTED HEREBY MAY NOT BE SOLD OR TRANSFERRED PRIOR TO THE DATE THAT IS THIRTY (30) DAYS AFTER THE DATE UPON WHICH THE COMPANY
COMPLETES ITS INITIAL BUSINESS COMBINATION (AS DEFINED IN SECTION 3 OF THE WARRANT AGREEMENT REFERRED TO HEREIN) EXCEPT
TO A PERMITTED TRANSFEREE (AS DEFINED IN SECTION 2 OF THE WARRANT AGREEMENT) WHO AGREES IN WRITING WITH THE COMPANY TO BE SUBJECT
TO SUCH TRANSFER PROVISIONS.
SECURITIES EVIDENCED HEREBY AND SHARES OF
CLASS A COMMON STOCK OF THE COMPANY ISSUED UPON EXERCISE OF SUCH SECURITIES SHALL BE ENTITLED TO REGISTRATION RIGHTS UNDER A REGISTRATION
AND STOCKHOLDER RIGHTS AGREEMENT TO BE EXECUTED BY THE COMPANY.”
Exhibit 5.1
San Francisco & New York
[●], 2021
890 5th Avenue Partners, Inc.
14 Elm Place, Suite 206
Rye, New York 10580
| |
Re: |
890 5th Avenue Partners, Inc. |
Registration Statement on Form S-1
Ladies and Gentlemen:
890 5th Avenue Partners, Inc., a Delaware
corporation (the “Company”), has filed with the Securities and Exchange Commission a Registration Statement
on Form S-1, as amended (the “Registration Statement”), under the Securities Act of 1933, as amended (the “Act”).
The Registration Statement relates to the underwritten public offering by the Company of up to 28,750,000 units of the Company
(the “Units”) (including up to 3,750,000 Units subject to the Underwriters’ (as defined below) option
to purchase additional Units), each Unit consisting of:
(i) one share of the Company’s Class
A common stock, par value $0.0001 per share (“Common Stock,” and the shares of Common Stock underlying the Units,
the “Shares”), for an aggregate of up to 28,750,000 Shares (including up to 3,750,000 Shares included in the
Units subject to the Underwriters’ option to purchase additional Units); and
(ii) one-third of one redeemable
warrant (each whole warrant, a “Warrant”) with each Warrant entitling the holder to purchase one share of
Common Stock, for an aggregate of up to 9,583,333 Warrants (including up to 1,250,000 Warrants included in the Units subject to the
Underwriters’ option to purchase additional Units) to be issued under a Warrant Agreement (the “Warrant
Agreement”) to be entered into by the Company and Continental Stock Transfer & Trust Company, as Warrant Agent,
pursuant to the terms of an underwriting agreement (the “Underwriting Agreement”) to be executed by the
Company and Cowen and Company, LLC and Craig-Hallum Capital Group LLC, as representatives of the several underwriters named
therein (the “Underwriters”). We have acted as counsel to the Company in connection with the preparation
and filing of the Registration Statement and this opinion is being furnished in accordance with the requirements of Item
601(b)(5) of Regulation S-K under the Act.
We have examined copies of such corporate
records, agreements, documents and other instruments of the Company and other certificates and documents of officials of the Company,
public officials, and others, as we have deemed appropriate for purposes of this letter. We have assumed the genuineness of all
signatures, the legal capacity of all natural persons, the authenticity of all documents submitted to us as originals, and the
conformity to authentic original documents of all copies submitted to us as conformed, certified, or reproduced copies. We have
also assumed that (i) upon sale and delivery of the Units, the Shares, and the Warrants, the certificates representing such
Units, Shares, and Warrants will conform to the specimens thereof filed as exhibits to the Registration Statement and will have
been duly countersigned by the transfer agent and duly registered by the registrar or, if uncertificated, valid book-entry notations
for the issuance of the Units, the Shares, and the Warrants in uncertificated form will have been duly made in the register of
the Company and (ii) at the time of execution, countersigning, issuance, and delivery of the Warrants, the Warrant Agreement
will be a valid and binding obligation of the Warrant Agent, enforceable against the Warrant Agent in accordance with its terms.
In addition, in providing the opinions herein, we have relied, with respect to matters related to the Company’s existence,
upon the certificates referenced above.
Based upon the foregoing, and subject to
the assumptions, exceptions, qualifications, and limitations stated herein, we are of the opinion that:
[●], 2021
Page 2
1. When the Underwriting Agreement
and the Warrant Agreement have been duly executed and delivered by the respective parties thereto and the Units, the Shares, and
the Warrants have been issued and delivered in accordance with the Underwriting Agreement against payment in full of the consideration
payable therefor as determined by the Board of Directors of the Company or a duly authorized committee thereof and as contemplated
by the Underwriting Agreement, the Units and the Shares and Warrants included in the Units will be duly authorized, validly issued,
fully paid and non-assessable.
2. When the Underwriting Agreement
and the Warrant Agreement have been duly executed and delivered by the respective parties thereto and the Warrants have been duly
executed by the Company and duly countersigned by the Warrant Agent in accordance with the terms of the Warrant Agreement and delivered
to and paid for by the Underwriters pursuant to the terms of the Underwriting Agreement, the Warrants will be valid and binding
obligations of the Company, enforceable against the Company in accordance with their terms.
3. When the Underwriting Agreement has been
duly executed and delivered by the respective parties thereto and the Units have been duly executed by the Company and delivered
by Continental Stock Transfer & Trust Company, as transfer agent, the Units will be valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms.
The opinions and other matters in
this letter are qualified in their entirety and subject to the following:
A. We express no opinion as to the laws
of any jurisdiction other than (i) the laws of the State of New York and (ii) the General Corporation Law of the State of Delaware.
As used herein, the term “General Corporation Law of the State of Delaware” includes the statutory provisions contained
therein and all applicable provisions of the Delaware Constitution and reported judicial decisions interpreting these laws.
B. The matters expressed in this letter
are subject to and qualified and limited by (i) applicable bankruptcy, insolvency, fraudulent transfer and conveyance, reorganization,
moratorium and similar laws affecting creditors’ rights and remedies generally; and (ii) general principles of equity, including
without limitation, concepts of materiality, reasonableness, good faith and fair dealing and the possible unavailability of specific
performance or injunctive relief (regardless of whether considered in a proceeding in equity or at law).
C. This opinion letter is limited to the
matters expressly stated herein and no opinion is to be inferred or implied beyond the opinions expressly set forth herein. We
undertake no, and hereby disclaim any, obligation to make any inquiry after the date hereof or to advise you of any changes in
any matter set forth herein, whether based on a change in the law, a change in any fact relating to the Company or any other person
or any other circumstance.
D. To the extent that any opinion relates
to the enforceability of the choice of the laws of the State of New York and choice of New York forum provisions contained in any
of the agreements referred to herein, the opinions stated herein are subject to the qualification that such enforceability may
be subject to, in each case, (i) the exceptions and limitations in New York General Obligations Law sections 5-1401 and 5-1402
and (ii) principles of comity and constitutionality.
We hereby consent to the filing of this
opinion as an exhibit to the Registration Statement and to the reference to us under the caption “Legal Matters” in
the prospectus comprising a part of the Registration Statement. In giving this consent, we do not thereby admit that we are included
within the category of persons whose consent is required by Section 7 of the Act and the rules and regulations promulgated
thereunder.
| |
Very truly yours, |
| |
|
| |
/s/ BraunHagey & Borden LLP |
| |
|
| |
BRAUNHAGEY & BORDEN LLP |
Exhibit 10.2
[●], 2021
890 5th Avenue Partners, Inc.
14 Elm Place, Suite 206
Rye, NY 10580
| Re: |
Initial Public Offering |
Ladies and Gentlemen:
This letter (this “Letter Agreement”)
is being delivered to you in accordance with the Underwriting Agreement (the “Underwriting Agreement”)
by and among 890 5th Avenue Partners, Inc., a Delaware corporation
(the “Company”), Cowen and Company, LLC and Craig-Hallum Capital Group LLC, as the representatives (the
“Representatives”) of the several underwriters named therein (each an “Underwriter”
and collectively, the “Underwriters”), relating to an underwritten initial public offering (the “Public
Offering”), of up to 28,750,000 of the Company’s units (including up to 3,750,000 units that may be purchased
to cover the Underwriters’ option to purchase additional units, if any) (the “Units”), each comprised
of one share of Class A common stock of the Company, par value $0.0001 per share (“Class A Common Stock”),
and one-third of one redeemable warrant (each whole warrant, a “Warrant”). Each Warrant entitles the holder
thereof to purchase one share of Class A Common Stock at a price of $11.50 per share, subject to adjustment. The Units will
be sold in the Public Offering pursuant to a registration statement on Form S-1 and prospectus (the “Prospectus”)
filed by the Company with the Securities and Exchange Commission (the “Commission”). Certain capitalized
terms used herein are defined in paragraph 12 hereof.
In order to induce the Company and the
Underwriters to enter into the Underwriting Agreement and to proceed with the Public Offering and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, 200 Park Avenue Partners, LLC, a Delaware
limited liability company (the “Sponsor”), PA 2 Co-Investment LLC, a Delaware limited liability
company (“Cowen Investments”), and Craig-Hallum Capital Group LLC, a Minnesota limited liability
company (solely in its capacity as a holder of Founder Shares and Private Placement Units, including the Private Placement
Shares and Private Placement Warrants and the shares of Class A Common Stock underlying the Private Placement Warrants,
and collectively with its affiliates who are holders of Founder Shares and Private Placement Units, including the Private
Placement Shares and Private Placement Warrants and the shares of Class A Common Stock underlying the Private Placement
Warrants, “Craig-Hallum” and together with the Sponsor and Cowen Investments, the
“Holders”), and the other undersigned persons (each such other undersigned persons, an
“Insider” and collectively, the “Insiders”), each hereby agrees, with
respect to itself, himself or herself only and severally but not jointly, with the Company as follows:
1. The Sponsor, Cowen Investments, Craig-Hallum
and each Insider agree that if the Company seeks stockholder approval of a proposed Business Combination, then in connection with
such proposed Business Combination, it, he or she shall (i) vote any Shares owned by it, him or her in favor of any proposed
Business Combination (including any proposals recommended by the Company’s Board of Directors in connection with such Business
Combination) and (ii) not redeem any Shares owned by it, him or her in connection with such stockholder approval. If the Company
seeks to consummate a proposed Business Combination by engaging in a tender offer, the Sponsor, Cowen Investments, Craig-Hallum
and each Insider agrees that it, he or she will not sell or tender any Shares owned by it, him or her in connection therewith.
2. The Sponsor, Cowen Investments, Craig-Hallum
and each Insider hereby agrees that in the event that the Company fails to consummate a Business Combination within 24 months from
the closing of the Public Offering, or such later period approved by the Company’s stockholders in accordance with the Company’s
amended and restated certificate of incorporation, the Sponsor, Cowen Investments, Craig-Hallum and each Insider shall take all
reasonable steps to cause the Company to (i) cease all operations except for the purpose of winding up, (ii) as promptly
as reasonably possible but not more than 10 business days thereafter, subject to lawfully available funds therefor, redeem 100%
of the shares of Class A Common Stock sold as part of the Units in the Public Offering (the “Offering Shares”),
at a per share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (which
interest shall be net of taxes payable and less up to $100,000 of interest to pay dissolution expenses), divided by the number
of then outstanding Offering Shares, which redemption will completely extinguish all Public Stockholders’ rights as stockholders
(including the right to receive further liquidating distributions, if any) and (iii) as promptly as reasonably possible following
such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors,
dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors
and the other requirements of applicable law. The Sponsor, Cowen Investments, Craig-Hallum and each Insider agree to not propose
any amendment to the Company’s amended and restated certificate of incorporation (A) to modify the substance or timing
of the Company’s obligation to allow redemption in connection with the Company’s initial Business Combination or to
redeem 100% of the Offering Shares if the Company does not complete its initial Business Combination within 24 months from the
closing of the Public Offering or (B) with respect to any other provision relating to stockholders’ rights or pre-initial
Business Combination activity, unless the Company provides its Public Stockholders with the opportunity to redeem their Offering
Shares upon approval of any such amendment at a per share price, payable in cash, equal to the aggregate amount then on deposit
in the Trust Account, including interest (which interest shall be net of taxes payable), divided by the number of then-outstanding
Offering Shares.
The Sponsor, Cowen Investments, Craig-Hallum
and each Insider acknowledge that it, he or she has no right, title, interest or claim of any kind in or to any monies held in
the Trust Account or any other asset of the Company as a result of any liquidation of the Company with respect to the Founder Shares
and Private Placement Shares held by it. The Sponsor, Cowen Investments, Craig-Hallum and each Insider hereby further waive, with
respect to any Shares held by it, him or her, if any, any redemption rights it, he or she may have in connection with (x) the
consummation of a Business Combination, including, without limitation, any such rights available in the context of a stockholder
vote to approve such Business Combination or in the context of a tender offer made by the Company to purchase shares of Class A
Common Stock and (y) a stockholder vote to approve an amendment to the Company’s amended and restated certificate of
incorporation (A) to modify the substance or timing of the Company’s obligation to allow redemptions in connection with
the Company’s initial Business Combination or to redeem 100% of the Offering Shares if the Company has not consummated its
initial Business Combination within 24 months from the closing of the Public Offering or (B) with respect to any other provision
relating to stockholders’ rights or pre-initial Business Combination activity (although the Sponsor and the Insiders shall
be entitled to redemption and liquidation rights with respect to any Offering Shares it or they hold if the Company fails to consummate
a Business Combination within 24 months from the date of the closing of the Public Offering).
3. Without limiting Cowen Investments’
and Craig-Hallum’s obligations under paragraph 7 hereof, during the period commencing on the date of commencement of sales
of the Public Offering and ending 180 days after such date, neither Cowen Investments nor Craig-Hallum shall sell, transfer, assign,
pledge or hypothecate any of its Founder Shares or Private Placement Units (or any securities underlying the Private Placement
Units, including the Private Placement Shares and Private Placement Warrants and the shares of Class A Common Stock underlying
the Private Placement Warrants), or subject any of such securities to any hedging, short sale, derivative, put, or call transaction
that would result in the effective economic disposition of such securities, except as provided in FINRA Rule 5110(e)(1), which
such restrictions shall not be subject to release or waiver, with or without the consent of the Representatives, during the period
commencing on the date of commencement of sales of the Public Offering and ending 180 days after such date. Notwithstanding the
provisions set forth in paragraphs 7(a) and (b) below, during the period commencing on the date of commencement of sales
of the Public Offering and ending 180 days after such date, the Sponsor, Cowen Investments, Craig-Hallum and each Insider shall
not, without the prior written consent of the Representatives, (i) offer, pledge, sell, contract to sell, sell any option
or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise
transfer or dispose of, directly or indirectly, or file with, or submit to, the Commission a registration statement under the Securities
Act of 1933, as amended (the “Securities Act”), relating to any Units, shares of Class A Common
Stock, Founder Shares, Warrants or any securities convertible into, or exercisable, or exchangeable for, any Units, shares of Class A
Common Stock, Founder Shares, or Warrants, or publicly disclose the intention to undertake any of the foregoing, or (ii) enter
into any swap or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of any Units,
shares of Class A Common Stock, Founder Shares, or Warrants or any such other securities, whether any such transaction described
in clause (i) or (ii) above is to be settled by delivery of units or such other securities, in cash or otherwise; provided,
however, that the foregoing does not apply to the forfeiture of any Founder Shares pursuant to their terms or any transfer
of Founder Shares to any current or future independent director of the company (as long as such current or future independent director
transferee is subject to this Letter Agreement or executes an agreement substantially identical to the terms of this Letter Agreement,
as applicable to directors and officers at the time of such transfer; and as long as, to the extent any Section 16 reporting
obligation is triggered as a result of such transfer, any related Section 16 filing includes a practical explanation as to
the nature of the transfer). Each of the Insiders and the Sponsor acknowledges and agrees that, prior to the effective date of
any release or waiver, of the restrictions set forth in this paragraph 3 or paragraph 7 below, the Company may announce the impending
release or waiver by press release through a major news service at least two business days before the effective date of the release
or waiver. The provisions of this paragraph will not apply if (i) the release or waiver is effected solely to permit a transfer
of securities that is not for consideration and (ii) the transferee has agreed in writing to be bound by the same terms described
in this Letter Agreement to the extent and for the duration that such terms remain in effect at the time of the transfer.
4. In the event of the liquidation of the
Trust Account, the Sponsor (which for purposes of clarification shall not extend to any other stockholders, or any members or managers
of the Sponsor) agrees to indemnify and hold harmless the Company against any and all loss, liability, claim, damage and expense
whatsoever (including, but not limited to, any and all legal or other expenses reasonably incurred in investigating, preparing
or defending against any litigation, whether pending or threatened, or any claim whatsoever) to which the Company may become subject
as a result of any claim by (i) any third party (other than the Company’s independent registered public accounting firm)
for services rendered or products sold to the Company or (ii) a prospective target business with which the Company has discussed
entering into a transaction agreement (a “Target”); provided, however, that such indemnification
of the Company by the Sponsor shall apply only to the extent necessary to ensure that such claims by a third party for services
rendered (other than the Company’s independent registered public accounting firm) or products sold to the Company or a Target
do not reduce the amount of funds in the Trust Account to below (i) $10.00 per Offering Share or (ii) such lesser amount
per Offering Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value
of the trust assets as of the date of the liquidation of the Trust Account, in each case, net of the amount of interest which may
be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver of any and all rights to seek access
to the Trust Account and except as to any claims under the Company’s indemnity of the Underwriters against certain liabilities,
including liabilities under the Securities Act. In the event that any such executed waiver is deemed to be unenforceable against
such third party, the Sponsor shall not be responsible to the extent of any liability for such third party claims. The Sponsor
shall have the right to defend against any such claim with counsel of its choice reasonably satisfactory to the Company if, within
15 days following written receipt of notice of the claim to the Sponsor, the Sponsor notifies the Company in writing that it shall
undertake such defense.
5. (a) To the extent that the Underwriters
do not exercise their option to purchase up to an additional 3,750,000 Units within 45 days from the date of the Prospectus (and
as further described in the Prospectus), (x) the Sponsor agrees that it shall forfeit, at no cost, a number of Founder Shares
in the aggregate equal to 821,741 multiplied by a fraction, (i) the numerator of which is 3,750,000 minus the number of Units
purchased by the Underwriters upon the exercise of their option to purchase additional Units and (ii) the denominator of which
is 3,750,000. (y) Cowen Investments agrees that it shall forfeit, at no cost, a number of Founder Shares in the aggregate
equal to 81,030 multiplied by a fraction, (i) the numerator of which is 3,750,000 minus the number of Units purchased by the
Underwriters upon the exercise of their option to purchase additional Units and (ii) the denominator of which is 3,750,000
and (z) Craig-Hallum agrees that it shall forfeit, at no cost, a number of Founder Shares in the aggregate equal to 34,729
multiplied by a fraction, (i) the numerator of which is 3,750,000 minus the number of Units purchased by the Underwriters
upon the exercise of their option to purchase additional Units and (ii) the denominator of which is 3,750,000. All references
in this Letter Agreement to Founder Shares of the Company being forfeited shall take effect as a contribution of such Founder Shares
to the Company’s capital as a matter of Delaware law. The forfeiture will be adjusted to the extent that the option to purchase
additional Units is not exercised in full by the Underwriters so that the number of Founder Shares will equal an aggregate of 20.0%
of the Company’s issued and outstanding Shares after the Public Offering (not including the Private Placement Shares). The
Initial Stockholders further agree that to the extent that the size of the Public Offering is increased or decreased, the Company
will effect a capitalization or stock repurchase or redemption, as applicable, immediately prior to the consummation of the Public
Offering in such amount as to maintain the number of Founder Shares at 20.0% of the Company’s issued and outstanding Shares
upon the consummation of the Public Offering (not including the Private Placement Shares). In connection with such increase or
decrease in the size of the Public Offering, then (A) the references to 3,750,000 in the numerator and denominator of the
formula in the first sentence of this paragraph shall be changed to a number equal to 15.0% of the number of shares of Class A
Common Stock included in the Units issued in the Public Offering, (B) the reference to 821,741, 81,030 and 34,729 in the formulas
set forth in the first sentence of this paragraph shall be adjusted to, respectively, the total number of Founder Shares that the
Sponsor would have to return to the Company in order for the number of Founder Shares that the Sponsor owns (together with the
Insiders) to equal an aggregate of approximately 17.53% of the Company’s issued and outstanding Shares after the Public Offering
(not including the Private Placement Shares), the total number of Founder Shares that Cowen Investments would have to return to
the Company in order for the number of Founder Shares that Cowen Investments owns to equal an aggregate of approximately 1.73%
of the Company’s issued and outstanding Shares after the Public Offering (not including the Private Placement Shares) and
the total number of Founder Shares that Craig-Hallum would have to return to the Company in order for the number of Founder Shares
that Craig-Hallum owns to equal an aggregate of approximately 0.74% of the Company’s issued and outstanding Shares after
the Public Offering (not including the Private Placement Shares).
(b) If, in connection with the closing
of a Business Combination, the Sponsor agrees to forfeit any Founder Shares or Private Placement Units (or any securities underlying
the Private Placement Units) to the Company at no cost or subject its Founder Shares or Private Placement Units (or any securities
underlying the Private Placement Units) to contractual terms or restrictions, convert its Founder Shares into other securities
or contractual rights or otherwise modify the terms of its Founder Shares or Private Placement Units (each a “Sponsor
Modification”), then each of Cowen Investments and Craig-Hallum agrees to forfeit, subject, convert or modify its
Founder Shares or Private Placement Units (or any securities underlying the Private Placement Units) on a pro rata basis and on
the same terms as the Sponsor, and hereby grants to the Company and any representative designated by the Company without further
action by Cowen Investments or Craig-Hallum a limited irrevocable power of attorney to effect such forfeiture or Sponsor Modification
on behalf of Cowen Investments and Craig-Hallum, which power of attorney shall be deemed to be coupled with an interest.
6. The Sponsor, Cowen Investments, Craig-Hallum
and each Insider hereby agree and acknowledge that: (i) the Underwriters and the Company would be irreparably injured in the
event of a breach by such Sponsor, Cowen Investments, Craig-Hallum or Insider of its, his or her obligations under paragraphs 1,
2, 3, 4, 5, 7(a), 7(b) and 9 of this Letter Agreement, (ii) monetary damages may not be an adequate remedy for such breach
and (iii) the non-breaching party shall be entitled to seek injunctive relief, in addition to any other remedy that such party
may have in law or in equity, in the event of such breach.
7. (a) The Sponsor, Cowen Investments,
Craig-Hallum and each Insider agree that it, he or she shall not Transfer (as defined below) any Founder Shares (or shares of Class A
Common Stock issuable upon conversion thereof) until the earlier of (A) one year after the completion of the Company’s
initial Business Combination and (B) subsequent to the Business Combination, (x) if the last reported sale price of the
Class A Common Stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations
and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Company’s initial
Business Combination or (y) the date on which the Company completes a liquidation, merger, stock exchange, reorganization
or other similar transaction that results in all of the Public Stockholders having the right to exchange their shares of Class A
Common Stock for cash, securities or other property (the “Founder Shares Lock-Up Period”).
(b) The Sponsor, Cowen Investments,
Craig-Hallum and each Insider agree that it, he or she shall not Transfer any Private Placement Units, including the Private Placement
Shares and one-third of one redeemable warrant (“Private Placement Warrants”) included therein or any
shares of Class A Common Stock issued or issuable upon the conversion or exercise of the Private Placement Warrants, until
30 days after the completion of a Business Combination (the “Private Placement Units Lock-Up Period”,
together with the Founder Shares Lock-Up Period, the “Lock-Up Periods”).
(c) Notwithstanding the provisions
set forth in paragraphs 7(a) and (b), Transfers of the Founder Shares, Private Placement Units, Private Placement Shares,
Private Placement Warrants and shares of Class A Common Stock issued or issuable upon the exercise or conversion of the Private
Placement Warrants or the Founder Shares and that are held by the Sponsor, Cowen Investments, Craig-Hallum or any Insider or any
of their permitted transferees (that have complied with this paragraph 7(c)), are permitted (a) to the Company’s officers
or directors, any affiliates or family members of any of the Company’s officers or directors, any members of the Holders,
or any affiliates of the Holders, (b) in the case of an individual, by gift to a member of the individual’s immediate
family or to a trust, the beneficiary of which is a member of the individual’s immediate family or an affiliate of such person,
or to a charitable organization; (c) in the case of an individual, by virtue of laws of descent and distribution upon death
of the individual; (d) in the case of an individual, pursuant to a qualified domestic relations order; (e) by private
sales or transfers made in connection with the consummation of the Company’s Business Combination at prices no greater than
the price at which the securities were originally purchased; (f) in the event of the Company’s liquidation prior to
the Company’s completion of an initial Business Combination; (g) by virtue of the laws of the State of Delaware or the
Sponsor’s limited liability company agreement, as amended, upon dissolution of the Sponsor; or (h) in the event of the
Company’s completion of a liquidation, merger, stock exchange, reorganization or other similar transaction which results
in all of the Public Stockholders having the right to exchange their Class A Common Stock for cash, securities or other property
subsequent to the Company’s completion of an initial Business Combination; provided, however, that in the case
of clauses (a) through (e), these permitted transferees must enter into a written agreement with the Company agreeing to be
bound by the transfer restrictions and other applicable restrictions in this Letter Agreement.
8. Each of the Sponsor, Cowen Investments,
Craig-Hallum and each Insider represents and warrants that it, he or she has never been suspended or expelled from membership in
any securities or commodities exchange or association or had a securities or commodities license or registration denied, suspended
or revoked. Each Insider’s biographical information furnished to the Company, if any (including any such information included
in the Prospectus), is true and accurate in all respects and does not omit any material information with respect to such Insider’s
background. The Sponsor’s, Cowen Investments’, Craig-Hallum’s and each Insider’s questionnaire furnished
to the Company, if any, is true and accurate in all respects. Each of the Sponsor, Cowen Investments, Craig-Hallum and each Insider
represents and warrants that it is not subject to or a respondent in any legal action for, any injunction, cease-and-desist order
or order or stipulation to desist or refrain from any act or practice relating to the offering of securities in any jurisdiction;
it has never been convicted of, or pleaded guilty to, any crime (i) involving fraud, (ii) relating to any financial transaction
or handling of funds of another person, or (iii) pertaining to any dealings in any securities and it is not currently a defendant
in any such criminal proceeding.
9. Subject to the following sentence,
each Insider hereby agrees not to participate in the formation of, or become an officer or director of, any other special
purpose acquisition company with a stated focus on the technology, media and telecommunications industry until the Company
has entered into a definitive agreement regarding a Business Combination or the Company has failed to complete a Business
Combination within 24 months after the closing of the Public Offering. For the avoidance of doubt and notwithstanding the
foregoing, each Insider may participate in the formation of, or become an officer or director of, any other special purpose
acquisition company that does not have a stated focus on the technology, media and telecommunications industry (including
those with a stated focus on health technology or medical technology) or that is a successor company to an existing special
purpose acquisition company in which any of them is interested at any time and whether or not the Company has entered into a
definitive agreement regarding a Business Combination. For the avoidance of doubt, this Section 9 does not apply to Cowen and Company, LLC, Cowen Investments or Craig-Hallum.
10. Except as disclosed in, or as expressly
contemplated by, the Prospectus, none of the Sponsor, Cowen Investments, Craig-Hallum nor any Insider nor any affiliate of the
Sponsor, Cowen Investments, Craig-Hallum or any Insider, nor any other director or officer of the Company or nominee, shall receive
from the Company any finder’s fee, reimbursement, consulting fee, monies in respect of any repayment of a loan or other compensation
prior to, or in connection with any services rendered in order to effectuate the consummation of the Company’s initial Business
Combination (regardless of the type of transaction that it is).
11. Each of the Sponsor, Cowen Investments,
Craig-Hallum and each Insider represents and warrants that it, he or she has full right and power, without violating any agreement
to which it, he or she is bound (including, without limitation, any non-competition or non-solicitation agreement with any employer
or former employer), to enter into this Letter Agreement and, as applicable, to serve as an officer and/or a director on the board
of directors of the Company and hereby consents to being named in the Prospectus as an officer and/or a director of the Company.
12. As used herein, (i) “Business
Combination” shall mean a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar
business combination, involving the Company and one or more businesses; (ii) “Shares” shall mean,
collectively, the Class A Common Stock, the Founder Shares, Private Placement Shares, and Class A Common Stock underlying
the Private Placement Warrants; (iii) “Founder Shares” shall mean the 7,187,500 shares of Class F
common stock, par value $0.0001 per share, issued and outstanding immediately prior to the consummation of the Public Offering
(up to 937,500 shares of which are subject to complete or partial forfeiture by the Holders to the extent the over-allotment option
is not exercised by the Underwriters); (iv) “Initial Stockholders” shall mean the Sponsor, Cowen
Investments, Craig-Hallum and any Insider that holds Founder Shares; (v) “Private Placement Shares”
shall mean the 702,500 shares of Class A Common Stock underlying the Private Placement Units (or 777,500 shares of Class A
Common Stock if the over-allotment option is exercised in full); (vi) “Private Placement Units”
shall mean the 702,500 units of the Company (or 777,500 units if the over-allotment option is exercised in full) that the Holders
have agreed to purchase for an aggregate purchase price of $7,025,000 in the aggregate (or $7,775,000 if the over-allotment option
is exercised in full), or $10.00 per unit, in a private placement that shall occur substantially concurrently with the consummation
of the Public Offering; (vii) “Public Stockholders” shall mean the holders of securities issued
in the Public Offering; (viii) “Trust Account” shall mean the trust fund into which a portion of
the net proceeds of the Public Offering shall be deposited; and (ix) “Transfer” shall mean the (a) sale
or assignment of, offer to sell, contract or agreement to sell, hypothecate, pledge, grant of any option to purchase or otherwise
dispose of or agreement to dispose of, directly or indirectly, or establishment or increase of a put equivalent position or liquidation
with respect to or decrease of a call equivalent position within the meaning of Section 16 of the Securities Exchange Act
of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder with respect to, any security,
(b) entry into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences
of ownership of any security, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise,
or (c) public announcement of any intention to effect any transaction specified in clause (a) or (b) of this sentence.
13. This Letter Agreement constitutes the
entire agreement and understanding of the parties hereto in respect of the subject matter hereof and supersedes all prior understandings,
agreements, or representations by or among the parties hereto, written or oral, to the extent they relate in any way to the subject
matter hereof or the transactions contemplated hereby. This Letter Agreement may not be changed, amended, modified or waived (other
than to correct a typographical error) as to any particular provision, except by a written instrument executed by (1) each
Insider and each Holder that is the subject of any such change, amendment modification or waiver and (2) the Company.
14. No party hereto may assign either this
Letter Agreement or any of its rights, interests, or obligations hereunder without the prior written consent of the other parties.
Any purported assignment in violation of this paragraph shall be void and ineffectual and shall not operate to transfer or assign
any interest or title to the purported assignee. This Letter Agreement shall be binding on the Sponsor, Cowen Investments, Craig-Hallum
and each Insider and their respective successors, heirs and assigns and permitted transferees.
15. Nothing in this Letter Agreement shall
be construed to confer upon, or give to, any person or corporation other than the parties hereto any right, remedy or claim under
or by reason of this Letter Agreement or of any covenant, condition, stipulation, promise or agreement hereof. All covenants, conditions,
stipulations, promises and agreements contained in this Letter Agreement shall be for the sole and exclusive benefit of the parties
hereto and their successors, heirs, personal representatives and assigns and permitted transferees; provided, however,
that the Underwriters shall benefit from the provisions set forth in paragraph 3, which such paragraphs shall not be amended or
modified without the written consent of the Representatives.
16. This Letter Agreement may be executed
in any number of original or facsimile counterparts and each of such counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and the same instrument.
17. This Letter Agreement shall be deemed
severable, and the invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability
of this Letter Agreement or of any other term or provision hereof. Furthermore, in lieu of any such invalid or unenforceable term
or provision, the parties hereto intend that there shall be added as a part of this Letter Agreement a provision as similar in
terms to such invalid or unenforceable provision as may be possible and be valid and enforceable.
18. This Letter Agreement shall be governed
by and construed and enforced in accordance with the laws of the State of New York. The parties hereto (i) all agree that
any action, proceeding, claim or dispute arising out of, or relating in any way to, this Letter Agreement shall be brought and
enforced in the courts of New York City, in the State of New York, and irrevocably submit to such jurisdiction and venue, which
jurisdiction and venue shall be exclusive and (ii) waive any objection to such exclusive jurisdiction and venue or that such
courts represent an inconvenient forum.
19. Any notice, consent or request to be
given in connection with any of the terms or provisions of this Letter Agreement shall be in writing and shall be sent by express
mail or similar private courier service, by certified mail (return receipt requested), by hand delivery or facsimile or other electronic
transmission.
20. Each party hereto shall not be liable
for any breaches or misrepresentations contained in this Letter Agreement by any other party to this Letter Agreement, and no party
shall be liable or responsible for the obligations of another party, including, without limitation, indemnification obligations
and notice obligations.
21. This Letter Agreement shall terminate
on the earlier of (i) the expiration of the Lock-Up Periods and (ii) the liquidation of the Company; provided,
however, that this Letter Agreement shall earlier terminate in the event that the Public Offering is not consummated and
closed by June 30, 2021; provided further that paragraph 4 of this Letter Agreement shall survive such liquidation.
[Signature page follows]
| |
Sincerely, |
| |
|
|
| |
200 Park Avenue Partners, LLC |
| |
|
|
| |
By: |
|
| |
|
Name: |
Adam Rothstein |
| |
|
Title: |
Manager |
| |
|
|
| |
PA 2 Co-Investment LLC |
| |
|
|
| |
By: |
|
| |
|
Name: |
|
| |
|
Title: |
|
| |
|
|
| |
Craig-Hallum Capital Group LLC |
| |
|
|
| |
By: |
|
| |
|
Name: |
|
| |
|
Title: |
|
| |
|
| |
Adam Rothstein |
| |
|
| |
|
| |
Emiliano Calemzuk |
| |
|
| |
|
| |
Michael Del Nin |
| |
|
| |
|
| |
Linda Yaccarino |
| |
|
| |
|
| |
Kelli Turner |
| |
|
| |
|
| |
David Bank |
| |
|
| |
|
| |
Scott Flanders |
| |
|
| |
|
| |
Jon Jashni |
| |
|
| |
|
| Acknowledged and Agreed: |
|
| |
|
|
| 890 5th Avenue Partners, Inc. |
|
| |
|
|
| By: |
|
|
| Name: |
Adam Rothstein |
|
| Title: |
Executive Chairman |
|
[Signature
Page to Letter Agreement]
Exhibit 10.3
INVESTMENT
MANAGEMENT TRUST AGREEMENT
This Investment Management Trust Agreement
(this “Agreement”) is made effective as of [●], 2021, by and between 890 5th Avenue Partners, Inc.,
a Delaware corporation (the “Company”), and Continental Stock Transfer & Trust Company, a New York
limited purpose trust company (the “Trustee”).
WHEREAS, the Company’s registration
statement on Form S-1, File No. 333-251650 (the “Registration Statement”) and prospectus (the “Prospectus”)
for the initial public offering of the Company’s units (the “Units”), each of which consists of
one share of the Company’s Class A common stock, par value $0.0001 per share (the “Common Stock”),
and one-third of one redeemable warrant, each whole warrant entitling the holder thereof to purchase one share of Common Stock (such
initial public offering hereinafter referred to as the “Offering”), has been declared effective as of
the date hereof (the “Effective Date”) by the U.S. Securities and Exchange Commission (capitalized terms
used herein and not otherwise defined shall have the meanings set forth in the Registration Statement);
WHEREAS, the Company has entered into an
Underwriting Agreement (the “Underwriting Agreement”) with Cowen and Company, LLC and Craig-Hallum Capital
Group LLC, as representatives (the “Representatives”) of the several underwriters (the “Underwriters”)
named therein;
WHEREAS, as described in the Prospectus,
and in accordance with the Company’s amended and restated certificate of incorporation, as the same may be amended from time
to time (the “Charter”), $250,000,000 of the aggregate proceeds of the Offering and sale of the Private
Placement Units (as defined in the Underwriting Agreement) (or $287,500,000, if the Underwriters’ over-allotment option is
exercised in full) will be delivered to the Trustee to be deposited and held in a segregated trust account located at all times
in the United States (the “Trust Account”) for the benefit of the Company and the holders of the Common
Stock included in the Units issued in the Offering as hereinafter provided (the amount to be delivered to the Trustee (and any
interest subsequently earned thereon) is referred to herein as the “Property,” the stockholders for whose
benefit the Trustee shall hold the Property will be referred to as the “Public Stockholders,” and the
Public Stockholders and the Company will be referred to together as the “Beneficiaries”);
WHEREAS, the Company has entered into that
certain Business Combination Marketing Agreement, dated as of [●], 2021, with the Representatives, pursuant to which the
Company will pay the Representatives a cash fee (the “Marketing Fee”) for certain advisory services upon
the consummation of the Company’s initial Business Combination (as defined below) in an amount equal to, in the aggregate,
3.5% of the gross proceeds of the Offering, including any proceeds from the full or partial exercise of the Underwriters’
over-allotment option; and
WHEREAS, the Company and the Trustee desire
to enter into this Agreement to set forth the terms and conditions pursuant to which the Trustee shall hold the Property.
NOW THEREFORE, IT IS AGREED:
1. Agreements and Covenants of Trustee.
The Trustee hereby agrees and covenants to:
(a) Hold the Property in trust for the
Beneficiaries in accordance with the terms of this Agreement in the Trust Account established by the Trustee in the United States
at J.P. Morgan Chase Bank, N.A., (or at another U.S.-chartered commercial bank with consolidated assets of $100 billion or more)
in the United States, maintained by the Trustee and at a brokerage institution selected by the Trustee that is reasonably satisfactory
to the Company;
(b) Manage, supervise and administer
the Trust Account subject to the terms and conditions set forth herein;
(c) In a timely manner, upon the
written instruction of the Company, invest and reinvest the Property solely in United States government securities within the
meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended, having a maturity of 185 days or less, or
in money market funds meeting the conditions of paragraphs (d)(1), (d)(2), (d)(3) and (d)(4) of Rule 2a-7 promulgated
under the Investment Company Act of 1940, as amended (or any successor rule), which invest only in direct U.S. government
treasury obligations, as determined by the Company; the Trustee may not invest in any other securities or assets, it being
understood that the Trust Account will earn no interest while account funds are uninvested awaiting the Company’s
instructions hereunder and the Trustee may earn bank credits or other consideration during such periods;
(d) Collect and receive, when due, all
principal, interest or other income arising from the Property, which shall become part of the “Property,”
as such term is used herein;
(e) Promptly notify the Company and the
Representatives of all communications received by the Trustee with respect to any Property requiring action by the Company;
(f) Supply any necessary information
or documents as may be requested by the Company (or its authorized agents) in connection with the Company’s preparation of
the tax returns relating to assets held in the Trust Account or in connection with the preparation or completion of the audit of
the Company’s financial statements by the Company’s auditors;
(g) Participate in any plan or proceeding
for protecting or enforcing any right or interest arising from the Property if, as and when instructed by the Company to do so;
(h) Render to the Company monthly written
statements of the activities of, and amounts in, the Trust Account reflecting all receipts and disbursements of the Trust Account;
(i) Commence liquidation of the Trust
Account only after and promptly after (x) receipt of, and only in accordance with the terms of, a letter from the Company (“Termination
Letter”) in a form substantially similar to that attached hereto as either Exhibit A or Exhibit B, as applicable,
signed on behalf of the Company by the Executive Chairman, Chief Executive Officer, Chief Financial Officer, President, Vice President,
Secretary or Chairman of the board of directors of the Company (the “Board”) or other authorized officer
of the Company, and, in the case of Exhibit A, acknowledged and agreed to by the Representatives, and complete the liquidation
of the Trust Account and distribute the Property in the Trust Account, including interest (which interest shall be net of taxes
payable, and less up to $100,000 of interest that may be released to the Company to pay dissolution expenses), only as directed
in the Termination Letter and the other documents referred to therein, or (y) upon the date which is, the later of (1) 24 months
after the closing of the Offering and (2) such later date as may be approved by the Company’s stockholders in accordance
with the Charter if a Termination Letter has not been received by the Trustee prior to such date, in which case the Trust Account
shall be liquidated in accordance with the procedures set forth in the Termination Letter attached as Exhibit B and the Property
in the Trust Account, including interest (which interest shall be net of taxes payable, and less up to $100,000 of interest that
may be released to the Company to pay dissolution expenses) shall be distributed to the Public Stockholders of record as of such
date; provided, however, that the Trustee has no obligation to monitor or question the Company’s position that an allocation
has been made for taxes payable;
(j) Upon written request from the
Company, which may be given from time to time in a form substantially similar to that attached hereto as Exhibit C, withdraw
from the Trust Account and distribute to the Company the amount of interest earned on the Property requested by the Company
to cover any tax obligation, including any franchise tax obligations, owed by the Company as a result of assets of the
Company or interest or other income earned on the Property, which amount shall be delivered directly to the Company by
electronic funds transfer or other method of prompt payment, and the Company shall forward such payment to the relevant
taxing authority, as applicable; provided, however, that to the extent there is not sufficient cash in the Trust Account to
pay such tax obligation, the Trustee shall liquidate such assets held in the Trust Account as shall be designated by the
Company in writing to make such distribution, so long as there is no reduction in the principal amount per share initially
deposited in the Trust Account; provided, further, that if the tax to be paid is a franchise tax, the written request by the
Company to make such distribution shall be accompanied by a copy of the franchise tax bill from the State of Delaware for the
Company and a written statement from the principal financial officer of the Company setting forth the actual amount payable
(it being acknowledged and agreed that any such amount in excess of interest income earned on the Property shall not be
payable from the Trust Account). The written request of the Company referenced above shall constitute presumptive evidence
that the Company is entitled to said funds, and the Trustee shall have no responsibility to look beyond said request;
(k) Upon written request from the Company,
which may be given from time to time in a form substantially similar to that attached hereto as Exhibit D, the Trustee shall distribute
to the remitting brokers on behalf of Public Stockholders redeeming shares of Common Stock the amount required to pay for redeemed
shares of Common Stock from Public Stockholders in connection with a stockholder vote to approve an amendment to the Charter to
(i) modify the substance or timing of the Company’s obligation to allow redemption in connection with a Business Combination
or to redeem 100% of the shares of Common Stock included in the Units sold in the Offering if the Company does not complete a Business
Combination within the time period set forth in the Company’s Charter or (ii) with respect to any other provision relating
to stockholders’ rights or pre-initial Business Combination activity. The written request of the Company referenced above
shall constitute presumptive evidence that the Company is entitled to distribute said funds, and the Trustee shall have no responsibility
to look beyond said request; and
(l) Not make any withdrawals or distributions
from the Trust Account other than pursuant to Sections 1(i), 1(j) or 1(k) above.
2. Agreements and Covenants of the
Company. The Company hereby agrees and covenants to:
(a) Give all instructions to the Trustee
hereunder in writing, signed by the Company’s Chairman of the Board, Executive Chairman, Chief Executive Officer, Chief Financial
Officer, President, Vice President or Secretary. In addition, except with respect to its duties under Sections 1(i), 1(j)
and 1(k) hereof, the Trustee shall be entitled to rely on, and shall be protected in relying on, any verbal or telephonic advice
or instruction which it, in good faith and with reasonable care, believes to be given by any one of the persons authorized above
to give written instructions, provided that the Company shall promptly confirm such instructions in writing;
(b) Subject to Section 4 hereof,
hold the Trustee harmless and indemnify the Trustee from and against any and all expenses, including reasonable counsel fees and
disbursements, or losses suffered by the Trustee in connection with any action taken by it hereunder and in connection with any
action, suit or other proceeding brought against the Trustee involving any claim, or in connection with any claim or demand, which
in any way arises out of or relates to this Agreement, the services of the Trustee hereunder, or the Property or any interest earned
on the Property, except for expenses and losses resulting from the Trustee’s gross negligence, fraud or willful misconduct.
Promptly after the receipt by the Trustee of notice of demand or claim or the commencement of any action, suit or proceeding, pursuant
to which the Trustee intends to seek indemnification under this Section 2(b), it shall notify the Company in writing of such
claim (hereinafter referred to as the “Indemnified Claim”). The Trustee shall have the right to conduct
and manage the defense against such Indemnified Claim; provided that the Trustee shall obtain the consent of the Company with respect
to the selection of counsel, which consent shall not be unreasonably withheld. The Trustee may not agree to settle any Indemnified
Claim without the prior written consent of the Company, which such consent shall not be unreasonably withheld. The Company may
participate in such action with its own counsel;
(c) Pay the Trustee the fees set
forth on Schedule A hereto, including an initial acceptance fee, annual administration fee, and transaction processing fee
which fees shall be subject to modification by the parties from time to time. It is expressly understood that the Property
shall not be used to pay such fees unless the disbursements are made to the Company pursuant to Section 1(i) solely in
connection with the completion of a Business Combination (defined below). The Company shall pay the Trustee the initial
acceptance fee and the first annual administration fee at the consummation of the Offering and thereafter on the anniversary
of the Effective Date. The Company shall not be responsible for any other fees or charges of the Trustee except as set forth
in this Section 2(c), Schedule A and as may be provided in Section 2(b) hereof;
(d) In connection with any vote of
the Company’s stockholders regarding a merger, capital stock exchange, asset acquisition, stock purchase,
reorganization or similar business combination involving the Company and one or more businesses (the “Business
Combination”), provide to the Trustee an affidavit or certificate of the inspector of elections for the
stockholder meeting (which inspector of elections may be the Trustee) verifying the vote of such stockholders regarding such
Business Combination;
(e) Provide the Representatives with
a copy of any Termination Letter(s) and/or any other correspondence that is sent to the Trustee with respect to any proposed withdrawal
from the Trust Account promptly after it issues the same;
(f) Instruct the Trustee to make only
those distributions that are permitted under this Agreement, and refrain from instructing the Trustee to make any distributions
that are not permitted under this Agreement; and
(g) Expressly provide in any Instruction
Letter (as defined in Exhibit A) delivered in connection with a Termination Letter in the form of Exhibit A that the Marketing
Fee be paid directly to the account or accounts directed by the Representatives respectively on behalf of the Underwriters prior
to any transfer of the funds held in the Trust Account to the Company or any other person.
3. Limitations of Liability.
The Trustee shall have no responsibility or liability to:
(a) Imply obligations, perform duties,
inquire or otherwise be subject to the provisions of any agreement or document other than this Agreement and that which is expressly
set forth herein;
(b) Take any action with respect to the
Property, other than as directed in Section 1 hereof, and the Trustee shall have no liability to any third party except for
liability arising out of the Trustee’s gross negligence, fraud or willful misconduct;
(c) Institute any proceeding for the
collection of any principal and income arising from, or institute, appear in or defend any proceeding of any kind with respect
to, any of the Property unless and until it shall have received instructions from the Company given as provided herein to do so
and the Company shall have advanced or guaranteed to it funds sufficient to pay any expenses incident thereto;
(d) Refund any depreciation in principal
of any Property;
(e) Assume that the authority of any
person designated by the Company to give instructions hereunder shall not be continuing unless provided otherwise in such designation,
or unless the Company shall have delivered a written revocation of such authority to the Trustee;
(f) The other parties hereto or to anyone
else for any action taken or omitted by it, or any action suffered by it to be taken or omitted, in good faith and in the Trustee’s
best judgment, except for the Trustee’s gross negligence, fraud or willful misconduct. The Trustee may rely conclusively
and shall be protected in acting upon any order, notice, demand, certificate, opinion or advice of counsel (including counsel chosen
by the Trustee, which counsel may be the Company’s counsel), statement, instrument, report or other paper or document (not
only as to its due execution and the validity and effectiveness of its provisions, but also as to the truth and acceptability of
any information therein contained) which the Trustee believes, in good faith and with reasonable care, to be genuine and to be
signed or presented by the proper person or persons. The Trustee shall not be bound by any notice or demand, or any waiver, modification,
termination or rescission of this Agreement or any of the terms hereof, unless evidenced by a written instrument delivered to the
Trustee, signed by the proper party or parties and, if the duties or rights of the Trustee are affected, unless it shall give its
prior written consent thereto;
(g) Verify the accuracy of the information
contained in the Registration Statement;
(h) Provide any assurance that any Business
Combination entered into by the Company or any other action taken by the Company is as contemplated by the Registration Statement;
(i) File information returns with respect
to the Trust Account with any local, state or federal taxing authority or provide periodic written statements to the Company documenting
the taxes payable by the Company, if any, relating to any interest income earned on the Property;
(j) Prepare, execute and file tax reports,
income or other tax returns and pay any taxes with respect to any income generated by, and activities relating to, the Trust Account,
regardless of whether such tax is payable by the Trust Account or the Company, including, but not limited to, franchise and income
tax obligations, except pursuant to Section 1(j) hereof; or
(k) Verify calculations, qualify or otherwise
approve the Company’s written requests for distributions pursuant to Sections 1(i), 1(j) or 1(k) hereof.
4. Trust Account Waiver. The
Trustee has no right of set-off or any right, title, interest or claim of any kind (“Claim”) to, or to
any monies in, the Trust Account, and hereby irrevocably waives any Claim to, or to any monies in, the Trust Account that it may
have now or in the future. In the event the Trustee has any Claim against the Company under this Agreement, including, without
limitation, under Section 2(b) or Section 2(c) hereof, the Trustee shall pursue such Claim solely against the Company
and its assets outside the Trust Account and not against the Property or any monies in the Trust Account.
5. Termination. This Agreement
shall terminate as follows:
(a) If the Trustee gives written notice
to the Company that it desires to resign under this Agreement, the Company shall use its reasonable efforts to locate a successor
trustee, pending which the Trustee shall continue to act in accordance with this Agreement. At such time that the Company notifies
the Trustee that a successor trustee has been appointed by the Company and has agreed to become subject to the terms of this Agreement,
the Trustee shall transfer the management of the Trust Account to the successor trustee, including but not limited to the transfer
of copies of the reports and statements relating to the Trust Account, whereupon this Agreement shall terminate; provided, however,
that in the event that the Company does not locate a successor trustee within ninety (90) days of receipt of the resignation notice
from the Trustee, the Trustee may submit an application to have the Property deposited with any court in the State of New York
or with the United States District Court for the Southern District of New York and upon such deposit, the Trustee shall be immune
from any liability whatsoever;
(b) At such time that the Trustee has
completed the liquidation of the Trust Account and its obligations in accordance with the provisions of Section 1(i) hereof
(which section may not be amended under any circumstances) and distributed the Property in accordance with the provisions of the
Termination Letter, this Agreement shall terminate except with respect to Section 2(b) and Section 4; or
(c) If the Offering is not
consummated within ten (10) business days of the date of this Agreement, in which case any funds received by the Trustee from
the Company, PA 2 Co-Investment LLC, Craig-Hallum Capital Group LLC and its affiliates or 200 Park Avenue Partners, LLC, as
applicable, shall be returned promptly following the receipt by the Trustee of written instructions from the Company.
6. Miscellaneous.
(a) The Company and the Trustee each
acknowledge that the Trustee will follow the security procedures set forth below with respect to funds transferred from the Trust
Account. The Company and the Trustee will each restrict access to confidential information relating to such security procedures
to authorized persons. Each party must notify the other party immediately if it has reason to believe unauthorized persons may
have obtained access to such confidential information, or of any change in its authorized personnel. In executing funds transfers,
the Trustee shall rely upon all information supplied to it by the Company, including, account names, account numbers, and all other
identifying information relating to a Beneficiary, Beneficiary’s bank or intermediary bank. Except for any liability arising
out of the Trustee’s gross negligence, fraud or willful misconduct, the Trustee shall not be liable for any loss, liability
or expense resulting from any error in the information or transmission of the funds.
(b) This Agreement shall be governed
by and construed and enforced in accordance with the laws of the State of New York, without giving effect to conflicts of law principles
that would result in the application of the substantive laws of another jurisdiction. This Agreement may be executed in several
original or facsimile counterparts, each one of which shall constitute an original, and together shall constitute but one instrument.
(c) This Agreement contains the entire
agreement and understanding of the parties hereto with respect to the subject matter hereof. This Agreement or any provision hereof
may only be changed, amended or modified (other than to correct a typographical error) by a writing signed by each of the parties
hereto.
(d) This Agreement or any provision hereof
may only be changed, amended or modified pursuant to Section 6(c) hereof with the Consent of the Stockholders. For purposes
of this Section 6(d), the “Consent of the Stockholders” means (i) receipt by the Trustee of a certificate
from the inspector of elections of the stockholder meeting certifying that the Company’s stockholders of record as of a record
date established in accordance with Section 213(a) of the Delaware General Corporation Law, as amended (or any successor rule),
who hold sixty-five percent (65%) or more of all then outstanding shares of the Common Stock and Class F common stock, par value
$0.0001 per share, of the Company voting together as a single class, have voted in favor of such change, amendment or modification,
or (ii) the Company’s stockholders of record as of the record date who hold sixty-five percent (65%) or more of all then
outstanding shares of the Common Stock and Class F common stock, par value $0.0001 per share, of the Company voting together as
a single class, have delivered to the Trustee a signed writing approving such change, amendment or modification. No such amendment
will affect any Public Stockholder who has otherwise indicated his, her or its election to redeem his, her or its shares of Common
Stock in connection with a stockholder vote sought to amend this Agreement, including a corresponding change to the Charter. Except
for any liability arising out of the Trustee’s gross negligence, fraud or willful misconduct, the Trustee may rely conclusively
on the certification from the inspector or elections referenced above and shall be relieved of all liability to any party for executing
the proposed amendment in reliance thereon.
(e) The parties hereto consent to the
jurisdiction and venue of any state or federal court located in the City of New York, State of New York, for purposes of resolving
any disputes hereunder. AS TO ANY CLAIM, CROSS-CLAIM OR COUNTERCLAIM IN ANY WAY RELATING TO THIS AGREEMENT, EACH PARTY WAIVES THE
RIGHT TO TRIAL BY JURY.
(f) Any notice, consent or request to
be given in connection with any of the terms or provisions of this Agreement shall be in writing and shall be sent by express mail
or similar private courier service, by certified mail (return receipt requested), by hand delivery or by electronic mail:
if to the Trustee, to:
Continental Stock Transfer & Trust Company
1 State Street, 30th Floor
New York, NY 10004
Attn: Francis Wolf and Celeste Gonzalez
Email: fwolf@continentalstock.com and cgonzalez@continentalstock.com
if to the Company, to:
890 5th Avenue Partners, Inc.
14 Elm Place, Suite 206
Rye, NY 10580
Attn: Adam Rothstein
Email: [●]
in each case, with copies to:
BraunHagey & Borden LLP
351 California Street, 10th Floor
San Francisco, CA 94104
Attn: Daniel J. Harris, Esq. and Jason R. Sanderson, Esq.
Email: harris@braunhagey.com and sanderson@braunhagey.com
and:
Greenberg Traurig, P.A.
333 S.E. 2nd Avenue
Miami, FL 33131
Attn: Alan I. Annex, Esq. and Win Rutherfurd, Esq.
Email: annexa@gtlaw.com and rutherfurdw@gtlaw.com
(g) Each of the Company and the Trustee
hereby represents that it has the full right and power and has been duly authorized to enter into this Agreement and to perform
its respective obligations as contemplated hereunder. The Trustee acknowledges and agrees that it shall not make any claims or
proceed against the Trust Account, including by way of set-off, and shall not be entitled to any funds in the Trust Account under
any circumstance.
(h) This Agreement is the joint product
of the Trustee and the Company and each provision hereof has been subject to the mutual consultation, negotiation and agreement
of such parties and shall not be construed for or against any party hereto.
(i) This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute
one and the same instrument. Delivery of a signed counterpart of this Agreement by facsimile or electronic transmission shall constitute
valid and sufficient delivery thereof.
(j) Each of the Company and the Trustee
hereby acknowledges and agrees that the Representatives on behalf of the Underwriters are third party beneficiaries of this Agreement.
(k) Except as specified herein, no party
to this Agreement may assign its rights or delegate its obligations hereunder to any other person or entity.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties have
duly executed this Investment Management Trust Agreement as of the date first written above.
| |
CONTINENTAL STOCK TRANSFER & |
| |
TRUST COMPANY, as Trustee |
| |
|
|
| |
By: |
|
| |
Name: |
Francis Wolf |
| |
Title: |
Vice President |
| |
|
|
| |
890 5th Avenue Partners, Inc. |
| |
|
|
| |
By: |
|
| |
Name: |
Adam Rothstein |
| |
Title: |
Executive Chairman |
[Signature Page to Investment Management Trust Agreement]
SCHEDULE
A
| Fee Item |
|
Time and method of payment |
|
Amount |
|
| Initial set-up fee |
|
Initial closing of Offering by wire transfer |
|
$ |
3,500.00 |
|
| Trustee administration fee |
|
First year, initial closing of Offering by wire transfer, thereafter on the anniversary of the effective date of the Offering by wire transfer or check |
|
$ |
10,000.00 |
|
| Transaction processing fee for disbursements to Company under Sections 1(i), 1(j) and 1(k) |
|
Billed to Company following disbursement made to Company under Sections 1(i), 1(j) and 1(k) |
|
$ |
250.00 |
|
| Paying Agent services as required pursuant to Sections 1(i) and 1(k) |
|
Billed to Company upon delivery of service pursuant to Sections 1(i) and 1(k) |
|
|
Prevailing rates |
|
EXHIBIT
A
[Letterhead of Company]
[Insert date]
Continental Stock Transfer & Trust Company
1 State Street, 30th Floor
New York, New York 10004
Attn: Francis Wolf and Celeste Gonzalez
Re: Trust Account - Termination
Letter
Dear Mr. Wolf and Ms. Gonzalez:
Pursuant to Section 1(i) of the Investment
Management Trust Agreement between 890 5th Avenue Partners, Inc. (the “Company”) and Continental Stock
Transfer & Trust Company (the “Trustee”), dated as of _________, 2021 (the “Trust Agreement”),
this is to advise you that the Company has entered into an agreement with [__________] (the “Target Business”)
to consummate a business combination with the Target Business (the “Business Combination”) on or about
[insert date]. The Company shall notify you at least seventy-two (72) hours in advance (or such shorter time as you may agree)
of the actual date of the consummation of the Business Combination (the “Consummation Date”). Capitalized
terms used but not defined herein shall have the meanings set forth in the Trust Agreement.
In accordance with the terms of the Trust
Agreement, we hereby authorize you to commence to liquidate all of the assets of the Trust Account and to transfer the proceeds
to a segregated account held by you on behalf of the Beneficiaries to the effect that, on the Consummation Date, all of the funds
held in the Trust Account will be immediately available for transfer to the account or accounts that the Company shall direct on
the Consummation Date (including as directed to it by the Representatives on behalf of the Underwriters (with respect to the Marketing
Fee)). It is acknowledged and agreed that while the funds are on deposit in the trust operating account at J.P. Morgan Chase Bank,
N.A. awaiting distribution, neither the Company nor the Representatives will earn any interest or dividends.
On the Consummation Date (i) counsel for
the Company shall deliver to you written notification that the Business Combination has been consummated, or will be consummated
substantially concurrently with your transfer of funds to the accounts as directed by the Company (the “Notification”)
and (ii) the Company shall deliver to you (a) a certificate of the Chief Executive Officer, which verifies that the Business Combination
has been approved by a vote of the Company’s stockholders, if a vote is held and (b) a joint written instruction signed by
the Company and the Representatives with respect to the transfer of the funds held in the Trust Account, including payment of the
Marketing Fee from the Trust Account (the “Instruction Letter”). You are hereby directed and authorized
to transfer the funds held in the Trust Account immediately upon your receipt of the Notification and the Instruction Letter, in
accordance with the terms of the Instruction Letter. In the event that certain deposits held in the Trust Account may not be liquidated
by the Consummation Date without penalty, you will notify the Company in writing of the same and the Company shall direct you as
to whether such funds should remain in the Trust Account and be distributed after the Consummation Date to the Company. Upon the
distribution of all the funds, net of any payments necessary for reasonable unreimbursed expenses related to liquidating the Trust
Account, your obligations under the Trust Agreement shall be terminated.
In the event that the Business Combination
is not consummated on the Consummation Date described in the notice thereof and we have not notified you on or before the original
Consummation Date of a new Consummation Date, then upon receipt by the Trustee of written instructions from the Company, the funds
held in the Trust Account shall be reinvested as provided in Section 1(c) of the Trust Agreement on the business day immediately
following the Consummation Date as set forth in such notice as soon thereafter as possible.
| |
Very truly yours, |
| |
|
| |
890 5th Avenue Partners, Inc. |
| |
|
| |
By: |
|
| |
Name: |
|
| |
Title: |
|
| Acknowledged and Agreed: |
|
| |
|
| Cowen and Company, LLC |
|
| |
|
| By: |
|
|
| Name: |
|
|
| Title: |
|
|
| |
|
|
| Craig-Hallum Capital Group LLC |
|
| |
|
| By: |
|
|
| Name: |
|
|
| Title: |
|
|
EXHIBIT
B
[Letterhead of Company]
[Insert date]
Continental Stock Transfer & Trust Company
1 State Street, 30th Floor
New York, New York 10004
Attn: Francis Wolf and Celeste Gonzalez
Re: Trust Account - Termination
Letter
Dear Mr. Wolf and Ms. Gonzalez:
Pursuant to Section 1(i) of the Investment
Management Trust Agreement between 890 5th Avenue Partners, Inc. (the “Company”) and Continental Stock
Transfer & Trust Company (the “Trustee”), dated as of _________, 2021 (the “Trust Agreement”),
this is to advise you that the Company did not effect a business combination with a Target Business (the “Business
Combination”) within the time frame specified in the Company’s Charter, as described in the Company’s
Prospectus relating to the Offering. Capitalized terms used but not defined herein shall have the meanings set forth in the Trust
Agreement.
In accordance with the terms of the Trust
Agreement, we hereby authorize you to liquidate all of the assets in the Trust Account and transfer the total proceeds into a
segregated account held by you on behalf of the Beneficiaries to await distribution to the Public Stockholders. The Company has
selected [_________, 20__]1 as the effective date
for the purpose of determining when the Public Stockholders will be entitled to receive their share of the liquidation proceeds.
You agree to be the Paying Agent of record and, in your separate capacity as Paying Agent, agree to distribute said funds directly
to the Company’s Public Stockholders in accordance with the terms of the Trust Agreement and the Company’s Charter.
Upon the distribution of all the funds, net of any payments necessary for reasonable unreimbursed expenses related to liquidating
the Trust Account, your obligations under the Trust Agreement shall be terminated, except to the extent otherwise provided in
Section 1(i) of the Trust Agreement.
| |
Very truly yours, |
| |
|
| |
890 5th Avenue Partners, Inc. |
| |
|
| |
By: |
|
| |
Name: |
|
| |
Title: |
|
| cc: |
Cowen and Company, LLC |
| |
Craig-Hallum Capital Group LLC |
1
24 months from the closing of the Offering or at a later date, if extended.
EXHIBIT
C
[Letterhead of Company]
[Insert date]
Continental Stock Transfer & Trust Company
1 State Street, 30th Floor
New York, New York 10004
Attn: Francis Wolf and Celeste Gonzalez
Re: Trust Account - Withdrawal
Instruction
Dear Mr. Wolf and Ms. Gonzalez:
Pursuant to Section 1(j) of
the Investment Management Trust Agreement between 890 5th Avenue Partners, Inc. (the “Company”) and Continental
Stock Transfer & Trust Company (the “Trustee”), dated as of _________, 2021 (the “Trust
Agreement"), the Company hereby requests that you deliver to the Company $[_____] of the interest income earned on
the Property as of the date hereof. Capitalized terms used but not defined herein shall have the meanings set forth in the Trust
Agreement.
The Company needs such funds to pay for
the tax obligations as set forth on the attached tax return or tax statement. In accordance with the terms of the Trust Agreement,
you are hereby directed and authorized to transfer (via wire transfer) such funds promptly upon your receipt of this letter to
the Company’s operating account at:
[WIRE
INSTRUCTION INFORMATION]
| |
Very truly yours, |
| |
|
| |
890 5th Avenue Partners, Inc. |
| |
|
| |
By: |
|
| |
Name: |
|
| |
Title: |
|
| cc: |
Cowen and Company, LLC |
| |
Craig-Hallum Capital Group LLC |
EXHIBIT
D
[Letterhead of Company]
[Insert date]
Continental Stock Transfer & Trust Company
1 State Street, 30th Floor
New York, New York 10004
Attn: Francis Wolf and Celeste Gonzalez
Re: Trust Account - Stockholder
Redemption Withdrawal Instruction
Dear Mr. Wolf and Ms. Gonzalez:
Pursuant to Section 1(k) of
the Investment Management Trust Agreement between 890 5th Avenue Partners, Inc. (the “Company”) and Continental
Stock Transfer & Trust Company (the “Trustee”), dated as of _________, 2021 (the “Trust
Agreement”), the Company hereby requests that you deliver to the redeeming Public Stockholders of the Company $[_____]
of the principal and interest income earned on the Property as of the date hereof to a segregated account held by you on behalf
of the Beneficiaries for distribution to the Public Stockholders who have requested redemption of their shares of Common Stock.
Capitalized terms used but not defined herein shall have the meanings set forth in the Trust Agreement.
The Company needs such funds to pay its
Public Stockholders who have properly elected to have their shares of Common Stock redeemed by the Company in connection with a
stockholder vote to approve an amendment to the Company’s Charter to (i) modify the substance or timing of the Company’s
obligation to allow redemption in connection with a Business Combination or to redeem 100% of the shares of Common Stock included
in the Units sold in the Offering if the Company does not complete a Business Combination within the time period set forth in the
Company’s Charter or (ii) with respect to any other provision relating to stockholders’ rights or pre-initial Business
Combination activity. As such, you are hereby directed and authorized to transfer (via wire transfer) such funds promptly upon
your receipt of this letter.
| |
Very truly yours, |
| |
|
| |
890 5th Avenue Partners, Inc. |
| |
|
| |
By: |
|
| |
Name: |
|
| |
Title: |
|
| cc: |
Cowen and Company, LLC |
| |
Craig-Hallum Capital Group LLC |
Exhibit 10.4
REGISTRATION
RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT
(this “Agreement”), dated as of [●], 2021, is made and entered into by and among 890 5th
Avenue Partners, Inc., a Delaware corporation (the “Company”), 200 Park Avenue Partners, LLC, a
Delaware limited liability company (the “Sponsor”), PA 2 Co-Investment LLC, a Delaware limited
liability company (“Cowen Investments”), and Craig-Hallum
Capital Group LLC and certain of ts affiliates (“Craig-Hallum” and together with the Sponsor
and Cowen Investments, the “Founders”) and the undersigned parties listed under Holder on the
signature page hereto (including the persons nominated as director of the Company, the “Director
Nominees”; each such party, together with the Founders, members of the Founders and any person or entity who
hereafter becomes a party to this Agreement pursuant to Section 5.2 of this Agreement, a
“Holder” and collectively the “Holders”).
RECITALS
WHEREAS, the Founders and Director
Nominees own an aggregate of 7,187,500 shares of the Company’s Class F common stock, par value $0.0001 per share (the “Founder
Shares”);
WHEREAS, up to an aggregate of 937,500
Founder Shares are subject to forfeiture by the Founders if the over-allotment option in connection with the Company’s initial
public offering is not exercised in full;
WHEREAS, the Founder Shares are convertible
into shares of the Company’s Class A common stock, par value $0.0001 per share (the “Common Stock”),
at any time at the option of the holder thereof or automatically at the time of the initial Business Combination (as defined below),
in each case on a one-for-one basis, subject to adjustment, on the terms and conditions provided in the Company’s amended
and restated certificate of incorporation, as may be amended from time to time;
WHEREAS, pursuant to separate agreements
with the Company, the Sponsor, Cowen Investments and Craig-Hallum agreed to purchase in a private placement an aggregate of 702,500
units (or up to 775,000 units if the over-allotment option in connection with the Company’s initial public offering is exercised
in full) (the “Private Placement Units”), with each such unit consisting of one share of the Company’s
Common Stock and one-third of one redeemable warrant (each whole warrant, “Private Placement Warrant”),
in a private placement transaction occurring simultaneously with the closing of the Company’s initial public offering, each
Private Placement Warrant entitling the holder to purchase one share of Common Stock at an exercise price of $11.50 per share;
WHEREAS, in order to fund working
capital deficiencies or to finance the Company’s transaction costs in connection with an initial Business Combination, the
Sponsor or certain of the Company’s officers and directors or affiliates of the foregoing may loan to the Company funds as
the Company may require, of which up to $1,500,000 of such loans may be convertible into units (“Working Capital Units”)
at a price of $10.00 per unit; and
WHEREAS, the Company and the Holders
desire to enter into this Agreement, pursuant to which the Company shall grant the Holders certain registration rights with respect
to certain securities of the Company, as set forth in this Agreement.
NOW, THEREFORE, in consideration
of the mutual representations, covenants and agreements contained herein, and certain other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. The terms defined
in this Article I shall, for all purposes of this Agreement, have the respective meanings set forth below:
“Adverse Disclosure”
shall mean any public disclosure of material non-public information, which disclosure, in the good faith judgment of the Chief
Executive Officer or the Chief Financial Officer, after consultation with counsel to the Company, (i) would be required to be made
in any Registration Statement or Prospectus in order for the applicable Registration Statement or Prospectus not to contain any
untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein (in the
case of any prospectus and any preliminary prospectus, in the light of the circumstances under which they were made) not misleading,
(ii) would not be required to be made at such time if the Registration Statement were not being filed, and (iii) the Company has
a bona fide business purpose for not making such information public.
“Agreement” shall
have the meaning given in the Preamble.
“Board” shall
mean the Board of Directors of the Company.
“Business Combination”
shall mean any merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination
with one or more businesses, involving the Company.
“Commission” shall
mean the U.S. Securities and Exchange Commission.
“Common Stock”
shall have the meaning given in the Recitals hereto.
“Company” shall
have the meaning given in the Preamble.
“Cowen Investments”
shall have the meaning given in the Preamble.
“Craig-Hallum”
shall have the meaning given in the Preamble.
“Demand Registration”
shall have the meaning given in subsection 2.1.1.
“Demanding Holders”
shall have the meaning given in subsection 2.1.1.
“Director Nominees”
shall have the meaning given in the Preamble.
“Exchange Act”
shall mean the Securities Exchange Act of 1934, as amended.
“Form S-1” shall
have the meaning given in subsection 2.1.1.
“Form S-3” shall
have the meaning given in Section 2.3.
“Founder Shares”
shall have the meaning given in the Recitals hereto and shall be deemed to include the shares of Common Stock issuable upon conversion
thereof.
“Founder Shares Lock-Up Period”
shall mean, with respect to the Founder Shares, the period ending on the earlier of (a) one year after the completion of the Company’s
initial Business Combination and (b) subsequent to the completion of the Company’s initial Business Combination, (x) if the
last reported sale price of the Common Stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock capitalizations,
reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150
days after the Company’s initial Business Combination or (y) the date on which the Company completes a liquidation, merger,
capital stock exchange or other similar transaction after the Company’s initial Business Combination that results in all
of the Company’s stockholders having the right to exchange their shares of Common Stock for cash, securities or other property.
“Founders” shall
have the meaning given in the Preamble.
“Holders” shall
have the meaning given in the Preamble.
“Insider Letter”
shall mean that certain letter agreement, dated as of the date hereof, by and among the Company, the Founders, the Director Nominees
and each of the Company’s officers, directors and officer nominees.
“Maximum Number of Securities”
shall have the meaning given in subsection 2.1.4.
“Misstatement”
shall mean an untrue statement of a material fact or an omission to state a material fact required to be stated in a Registration
Statement or Prospectus, or necessary to make the statements in a Registration Statement or Prospectus in the light of the circumstances
under which they were made not misleading.
“Permitted Transferees”
shall mean any person or entity to whom a Holder of Registrable Securities is permitted to transfer such Registrable Securities
prior to the expiration of the Founder Shares Lock-Up Period or Private Placement Lock-Up Period, as the case may be, under the
Insider Letter and any other applicable agreement between such Holder and the Company, and to any transferee thereafter.
“Piggyback Registration”
shall have the meaning given in subsection 2.2.1.
“Private Placement Lock-Up Period”
shall mean, with respect to Private Placement Units, including the Private Placement Warrants and Common Stock included therein,
and any of the shares of Common Stock issued or issuable upon the exercise or conversion of the Private Placement Warrants and
that are held by the initial purchasers of the Private Placement Units or their Permitted Transferees, the period ending 30 days
after the completion of the Company’s initial Business Combination.
“Private Placement Units”
shall have the meaning given in the Recitals hereto.
“Private Placement Warrants”
shall have the meaning given in the Recitals hereto.
“Pro Rata” shall
have the meaning given in subsection 2.1.4.
“Prospectus” shall
mean the prospectus included in any Registration Statement, as supplemented by any and all prospectus supplements and as amended
by any and all post-effective amendments and including all material incorporated by reference in such prospectus.
“Registrable Security”
shall mean (a) the shares of Common Stock issued or issuable upon the conversion of any Founder Shares, (b) the Private Placement
Units (including the Private Placement Warrants and Common Stock included therein and any shares of the Common Stock issued or
issuable upon the exercise of any Private Placement Warrant), (c) any outstanding shares of Common Stock or any other equity security
(including the shares of Common Stock issued or issuable upon the exercise of any other equity security) of the Company held by
a Holder as of the date of this Agreement, (d) any equity securities (including the shares of Common Stock issued or issuable upon
the exercise of any such equity security) of the Company issuable upon conversion of any working capital loans in an amount up
to $1,500,000 made to the Company by a Holder (including the Working Capital Units, which include any shares of Common Stock included
in such Working Capital Units, any warrants included in such Working Capital Units and any shares of Common Stock issued or issuable
upon the exercise of the warrants included in such Working Capital Units), and (e) any other equity security of the Company issued
or issuable with respect to any such shares of Common Stock by way of a stock dividend or stock split or in connection with a combination
of shares, recapitalization, merger, consolidation or reorganization; provided, however, that, as to any particular
Registrable Security, such securities shall cease to be Registrable Securities when: (A) a Registration Statement with respect
to the sale of such securities shall have become effective under the Securities Act and such securities shall have been sold, transferred,
disposed of or exchanged in accordance with such Registration Statement; (B) such securities shall have been otherwise transferred,
new certificates for such securities not bearing a legend restricting further transfer shall have been delivered by the Company
and subsequent public distribution of such securities shall not require registration under the Securities Act; (C) such securities
shall have ceased to be outstanding; (D) such securities may be sold without registration pursuant to Rule 144 promulgated under
the Securities Act (or any successor rule promulgated thereafter by the Commission) (but with no volume or other restrictions or
limitations); or (E) such securities have been sold to, or through, a broker, dealer or underwriter in a public distribution or
other public securities transaction.
“Registration”
shall mean a registration effected by preparing and filing a registration statement or similar document in compliance with the
requirements of the Securities Act, and the applicable rules and regulations promulgated thereunder, and such registration statement
becoming effective.
“Registration Expenses”
shall mean the out-of-pocket expenses of a Registration, including, without limitation, the following:
(A) all registration and filing fees (including
fees with respect to filings required to be made with the Financial Industry Regulatory Authority, Inc.) and any securities exchange
on which the Common Stock is then listed;
(B) fees and expenses of compliance with
securities or blue sky laws (including reasonable fees and disbursements of counsel for the Underwriters in connection with blue
sky qualifications of Registrable Securities);
(C) printing, messenger, telephone and delivery
expenses;
(D) reasonable fees and disbursements of
counsel for the Company;
(E) reasonable fees and disbursements of
all independent registered public accountants of the Company incurred specifically in connection with such Registration; and
(F) reasonable fees and expenses of one
(1) legal counsel selected by the majority-in-interest of the Demanding Holders initiating a Demand Registration to be registered
for offer and sale in the applicable Registration.
“Registration Statement”
shall mean any registration statement that covers the Registrable Securities pursuant to the provisions of this Agreement, including
the Prospectus included in such registration statement, amendments (including post-effective amendments) and supplements to such
registration statement, and all exhibits to and all material incorporated by reference in such registration statement.
“Requesting Holder”
shall have the meaning given in subsection 2.1.1.
“Securities Act”
shall mean the Securities Act of 1933, as amended.
“Shelf” shall
have the meaning given in Section 2.3.
“Sponsor” shall
have the meaning given in the Preamble.
“Working Capital Units”
shall have the meaning given in the Recitals hereto.
“Underwriter”
shall mean a securities dealer who purchases any Registrable Securities as principal in an Underwritten Offering and not as part
of such dealer’s market-making activities.
“Underwritten Registration”
or “Underwritten Offering” shall mean a Registration in which securities of the Company are sold to an
Underwriter in a firm commitment underwriting for distribution to the public.
ARTICLE II
REGISTRATIONS
2.1 Demand Registration.
2.1.1 Request for Registration. Subject
to the provisions of subsection 2.1.4 and Section 2.4 hereof, at any time and from time to time on or after
the date the Company consummates the initial Business Combination (i) Cowen Investments and Craig-Hallum or (ii) the Holders of
at least a majority in interest of the then outstanding number of Registrable Securities (excluding Registrable Securities held
by Cowen Investments, Craig-Hallum and their respective Permitted Transferees) (Cowen Investments and Craig-Hallum or such Holders,
as the case may be, the “Demanding Holders”) may make a written demand for Registration under the Securities
Act of all or part of their Registrable Securities, which written demand shall describe the amount and type of securities to be
included in such Registration and the intended method(s) of distribution thereof (such written demand a “Demand Registration”).
The Company shall, within ten (10) days of the Company’s receipt of the Demand Registration, notify, in writing, all
other Holders of Registrable Securities of such demand, and each Holder of Registrable Securities who thereafter wishes to include
all or a portion of such Holder’s Registrable Securities in a Registration pursuant to a Demand Registration (each such Holder
that includes all or a portion of such Holder’s Registrable Securities in such Registration, a “Requesting Holder”)
shall so notify the Company, in writing, within five (5) days after the receipt by the Holder of the notice from the Company.
Upon receipt by the Company of any such written notification from a Requesting Holder(s) to the Company, such Requesting Holder(s)
shall be entitled to have their Registrable Securities included in a Registration pursuant to a Demand Registration and the Company
shall effect, as soon thereafter as practicable, the Registration of all Registrable Securities requested by the Demanding Holder(s)
and Requesting Holder(s) pursuant to such Demand Registration, including by filing a Registration Statement relating thereto as
soon as practicable, but not more than forty five (45) days immediately after the Company’s receipt of the Demand Registration.
Under no circumstances shall the Company be obligated to effect more than an aggregate of three (3) Registrations pursuant
to a Demand Registration under this subsection 2.1.1 with respect to any or all Registrable Securities; provided,
however, that (i) this limitation shall not apply to any Demand Registration initiated by Cowen Investments and Craig-Hallum,
which shall be governed by Section 3.6 and (ii) a Registration shall not be counted for such purposes unless a Form S-1
or any similar long-form registration statement that may be available at such time (“Form S-1”) has become
effective and all of the Registrable Securities requested by the Requesting Holders to be registered on behalf of the Requesting
Holders in such Form S-1 Registration have been sold, in accordance with Section 3.1 of this Agreement.
2.1.2 Effective Registration. Notwithstanding
the provisions of subsection 2.1.1 above or any other part of this Agreement, a Registration pursuant to a Demand Registration
shall not count as a Registration unless and until (i) the Registration Statement filed with the Commission with respect to a Registration
pursuant to a Demand Registration has been declared effective by the Commission and (ii) the Company has complied with all of its
obligations under this Agreement with respect thereto; provided, further, that if, after such Registration Statement
has been declared effective, an offering of Registrable Securities in a Registration pursuant to a Demand Registration is subsequently
interfered with by any stop order or injunction of the Commission, federal or state court or any other governmental agency the
Registration Statement with respect to such Registration shall be deemed not to have been declared effective, unless and until,
(i) such stop order or injunction is removed, rescinded or otherwise terminated and (ii) a majority-in-interest of the Demanding
Holders initiating such Demand Registration thereafter affirmatively elect to continue with such Registration and accordingly notify
the Company in writing, but in no event later than five (5) days, of such election; provided, further, that the Company
shall not be obligated or required to file another Registration Statement until the Registration Statement that has been previously
filed with respect to a Registration pursuant to a Demand Registration becomes effective or is subsequently terminated.
2.1.3 Underwritten Offering. Subject
to the provisions of subsection 2.1.4 and Section 2.4 hereof, if a majority-in-interest of the Demanding
Holders so advise the Company as part of their Demand Registration that the offering of the Registrable Securities pursuant to
such Demand Registration shall be in the form of an Underwritten Offering, then the right of such Demanding Holder or Requesting
Holder (if any) to include its Registrable Securities in such Registration shall be conditioned upon such Holder’s participation
in such Underwritten Offering and the inclusion of such Holder’s Registrable Securities in such Underwritten Offering to
the extent provided herein. All such Holders proposing to distribute their Registrable Securities through an Underwritten Offering
under this subsection 2.1.3 shall enter into an underwriting agreement in customary form with the Underwriter(s) selected
for such Underwritten Offering by the majority-in-interest of the Demanding Holders initiating the Demand Registration.
2.1.4 Reduction of Underwritten Offering.
If the managing Underwriter or Underwriters in an Underwritten Registration pursuant to a Demand Registration, in good faith, advises
the Company, the Demanding Holders and the Requesting Holders (if any) in writing that the dollar amount or number of Registrable
Securities that the Demanding Holders and the Requesting Holders (if any) desire to sell, taken together with all other Common
Stock or other equity securities that the Company desires to sell and the Common Stock, if any, as to which a Registration has
been requested pursuant to separate written contractual piggy-back registration rights held by any other stockholders who desire
to sell, exceeds the maximum dollar amount or maximum number of equity securities that can be sold in the Underwritten Offering
without adversely affecting the proposed offering price, the timing, the distribution method, or the probability of success of
such offering (such maximum dollar amount or maximum number of such securities, as applicable, the “Maximum Number
of Securities”), then the Company shall include in such Underwritten Offering, as follows: (i) first, the Registrable
Securities of the Demanding Holders and the Requesting Holders (if any) (pro rata based on the respective number of Registrable
Securities that each Demanding Holder and Requesting Holder (if any) has requested be included in such Underwritten Registration
and the aggregate number of Registrable Securities that the Demanding Holders and Requesting Holders have requested be included
in such Underwritten Registration (such proportion is referred to herein as “Pro Rata”)) that can be
sold without exceeding the Maximum Number of Securities; (ii) second, to the extent that the Maximum Number of Securities has not
been reached under the foregoing clause (i), the Common Stock or other equity securities that the Company desires to sell, which
can be sold without exceeding the Maximum Number of Securities; and (iii) third, to the extent that the Maximum Number of Securities
has not been reached under the foregoing clauses (i) and (ii), the Common Stock or other equity securities of other persons or
entities that the Company is obligated to register in a Registration pursuant to separate written contractual arrangements with
such persons and that can be sold without exceeding the Maximum Number of Securities.
2.1.5 Demand Registration Withdrawal.
Cowen Investments and Craig-Hallum (in the case of a Registration under subsection 2.1.1 demanded by Cowen Investments and
Craig-Hallum), a majority-in-interest of the Demanding Holders initiating a Demand Registration or a majority-in-interest of the
Requesting Holders (if any), pursuant to a Registration under subsection 2.1.1 shall have the right to withdraw from a Registration
pursuant to such Demand Registration for any or no reason whatsoever upon written notification to the Company and the Underwriter
or Underwriters (if any) of their intention to withdraw from such Registration prior to the effectiveness of the Registration Statement
filed with the Commission with respect to the Registration of their Registrable Securities pursuant to such Demand Registration
(or in the case of an Underwritten Registration pursuant to Rule 415 under the Securities Act, at least two (2) business days prior
to the time of pricing of the applicable offering). Notwithstanding anything to the contrary in this Agreement, (i) the Company
may effect any Underwritten Registration pursuant to any then effective Registration Statement, including a Form S-3, that is then
available for such offering and (ii) the Company shall be responsible for the Registration Expenses incurred in connection
with a Registration pursuant to a Demand Registration prior to its withdrawal under this subsection 2.1.5; provided
that if the Company pays such expenses related to a Demand Registration initiated by Cowen Investments and Craig-Hallum, such registration
shall count as a Demand Registration for purposes of Section 3.6.
2.2 Piggyback Registration.
2.2.1 Piggyback Rights. If, at any
time on or after the date the Company consummates the initial Business Combination, the Company proposes to file a Registration
Statement under the Securities Act with respect to an offering of equity securities, or securities or other obligations exercisable
or exchangeable for, or convertible into equity securities, for its own account or for the account of stockholders of the Company
(or by the Company and by the stockholders of the Company including, without limitation, pursuant to Section 2.1 hereof),
other than a Registration Statement (i) filed in connection with any employee stock option or other benefit plan, (ii) for
an exchange offer or offering of securities solely to the Company’s existing stockholders, (iii) for an offering of debt
that is convertible into equity securities of the Company or (iv) for a dividend reinvestment plan, then the Company shall give
written notice of such proposed filing to all of the Holders of Registrable Securities as soon as practicable but not less than
ten (10) days before the anticipated filing date of such Registration Statement, which notice shall (A) describe the amount
and type of securities to be included in such offering, the intended method(s) of distribution, and the name of the proposed managing
Underwriter or Underwriters, if any, in such offering, and (B) offer to all of the Holders of Registrable Securities the opportunity
to register the sale of such number of Registrable Securities as such Holders may request in writing within five (5) days after
receipt of such written notice (such Registration a “Piggyback Registration”). The Company shall, in
good faith, cause such Registrable Securities to be included in such Piggyback Registration and shall use its best efforts to cause
the managing Underwriter or Underwriters of a proposed Underwritten Offering to permit the Registrable Securities requested by
the Holders pursuant to this subsection 2.2.1 to be included in a Piggyback Registration on the same terms and conditions
as any similar securities of the Company included in such Registration and to permit the sale or other disposition of such Registrable
Securities in accordance with the intended method(s) of distribution thereof. All such Holders proposing to distribute their Registrable
Securities through an Underwritten Offering under this subsection 2.2.1 shall enter into an underwriting agreement
in customary form with the Underwriter(s) selected for such Underwritten Offering by the Company.
2.2.2 Reduction of Piggyback Registration.
If the managing Underwriter or Underwriters in an Underwritten Registration that is to be a Piggyback Registration, in good faith,
advises the Company and the Holders of Registrable Securities participating in the Piggyback Registration in writing that the dollar
amount or number of the shares of Common Stock that the Company desires to sell, taken together with (i) the Common Stock,
if any, as to which Registration has been demanded pursuant to separate written contractual arrangements with persons or entities
other than the Holders of Registrable Securities hereunder, (ii) the Registrable Securities as to which registration has been requested
pursuant to Section 2.2 hereof, and (iii) the Common Stock, if any, as to which Registration has been requested pursuant
to separate written contractual piggy-back registration rights of other stockholders of the Company, exceeds the Maximum Number
of Securities, then:
(a) If the Registration is undertaken for
the Company’s account, the Company shall include in any such Registration (A) first, the Common Stock or other equity securities
that the Company desires to sell, which can be sold without exceeding the Maximum Number of Securities; (B) second, to the extent
that the Maximum Number of Securities has not been reached under the foregoing clause (A), the Registrable Securities of Holders
exercising their rights to register their Registrable Securities pursuant to subsection 2.2.1 hereof, Pro Rata, which
can be sold without exceeding the Maximum Number of Securities; and (C) third, to the extent that the Maximum Number of Securities
has not been reached under the foregoing clauses (A) and (B), the Common Stock, if any, as to which Registration has been requested
pursuant to written contractual piggy-back registration rights of other stockholders of the Company, which can be sold without
exceeding the Maximum Number of Securities;
(b) If the Registration is pursuant to a
request by persons or entities other than the Holders of Registrable Securities, then the Company shall include in any such Registration
(A) first, the Common Stock or other equity securities, if any, of such requesting persons or entities, other than the Holders
of Registrable Securities, which can be sold without exceeding the Maximum Number of Securities; (B) second, to the extent that
the Maximum Number of Securities has not been reached under the foregoing clause (A), the Registrable Securities of Holders exercising
their rights to register their Registrable Securities pursuant to subsection 2.2.1, Pro Rata, which can be sold without
exceeding the Maximum Number of Securities; (C) third, to the extent that the Maximum Number of Securities has not been reached
under the foregoing clauses (A) and (B), the Common Stock or other equity securities that the Company desires to sell, which can
be sold without exceeding the Maximum Number of Securities; and (D) fourth, to the extent that the Maximum Number of Securities
has not been reached under the foregoing clauses (A), (B) and (C), the Common Stock or other equity securities for the account
of other persons or entities that the Company is obligated to register pursuant to separate written contractual arrangements with
such persons or entities, which can be sold without exceeding the Maximum Number of Securities.
2.2.3 Piggyback Registration Withdrawal.
Any Holder of Registrable Securities shall have the right to withdraw from a Piggyback Registration for any or no reason whatsoever
upon written notification to the Company and the Underwriter or Underwriters (if any) of his, her or its intention to withdraw
from such Piggyback Registration prior to the effectiveness of the Registration Statement filed with the Commission with respect
to such Piggyback Registration (or in the case of an Underwritten Registration pursuant to Rule 415 under the Securities Act, at
least two (2) business days prior to the time of pricing of the applicable offering). The Company (whether on its own good faith
determination or as the result of a request for withdrawal by persons pursuant to separate written contractual obligations) may
withdraw a Registration Statement filed with the Commission in connection with a Piggyback Registration at any time prior to the
effectiveness of such Registration Statement. Notwithstanding anything to the contrary in this Agreement, the Company shall be
responsible for the Registration Expenses incurred in connection with the Piggyback Registration prior to its withdrawal under
this subsection 2.2.3.
2.2.4 Unlimited Piggyback Registration
Rights. For purposes of clarity, any Registration effected pursuant to Section 2.2 hereof shall not be counted
as a Registration pursuant to a Demand Registration effected under Section 2.1 hereof.
2.3 Shelf Registrations. The Holders
of Registrable Securities may at any time, and from time to time, request in writing that the Company, pursuant to Rule 415 under
the Securities Act (or any successor rule promulgated thereafter by the Commission), register the resale of any or all of their
Registrable Securities on Form S-3 or any similar short form registration statement that may be available at such time (“Form
S-3”), or if the Company is ineligible to use Form S-3, on Form S-1; a registration statement filed pursuant
to this Section 2.3 (a “Shelf”) shall provide for the resale of the Registrable Securities
included therein pursuant to any method or combination of methods legally available to, and requested by, any Holder. Within three
(3) business days of the Company’s receipt of a written request from a Holder or Holders of Registrable Securities for a
Registration on a Shelf, the Company shall promptly give written notice of the proposed Registration to all other Holders of Registrable
Securities, and each Holder of Registrable Securities who thereafter wishes to include all or a portion of such Holder’s
Registrable Securities in such Registration shall so notify the Company, in writing, within three (3) business days after the receipt
by the Holder of the notice from the Company. As soon as practicable thereafter, but not more than ten (10) business days after
the Company’s initial receipt of such written request for a Registration on a Shelf, the Company shall register all or such
portion of such Holder’s Registrable Securities as are specified in such written request, together with all or such portion
of Registrable Securities of any other Holder or Holders joining in such request as are specified in the written notification given
by such Holder or Holders; provided, however, that the Company shall not be obligated to effect any such Registration pursuant
to this Section 2.3 if the Holders of Registrable Securities, together with the Holders of any other equity securities
of the Company entitled to inclusion in such Registration, propose to sell the Registrable Securities and such other equity securities
(if any) at any aggregate price to the public of less than $5,000,000. The Company shall maintain each Shelf in accordance
with the terms hereof, and shall prepare and file with the Commission such amendments, including post-effective amendments, and
supplements as may be necessary to keep such Shelf continuously effective, available for use and in compliance with the provisions
of the Securities Act until such time as there are no longer any Registrable Securities included on such Shelf. In the event the
Company files a Shelf on Form S-1, the Company shall use its commercially reasonable efforts to convert the Form S-1
to a Form S-3 as soon as practicable after the Company is eligible to use Form S-3.
2.4 Restrictions on Registration Rights.
If (A) during the period starting with the date sixty (60) days prior to the Company’s good faith estimate of the date of
the filing of, and ending on a date one hundred and twenty (120) days after the effective date of, a Company initiated Registration
and provided that the Company has delivered written notice to the Holders prior to receipt of a Demand Registration pursuant to
subsection 2.1.1 and it continues to actively employ, in good faith, all reasonable efforts to cause the applicable
Registration Statement to become effective; (B) the Holders have requested an Underwritten Registration and the Company and the
Holders are unable to obtain the commitment of underwriters to firmly underwrite the offer; or (C) in the good faith judgment of
the Board such Registration would be seriously detrimental to the Company and the Board concludes as a result that it is essential
to defer the filing of such Registration Statement at such time, then in each case the Company shall furnish to such Holders a
certificate signed by the Chairman of the Board or Executive Chairman stating that in the good faith judgment of the Board it would
be seriously detrimental to the Company for such Registration Statement to be filed in the near future and that it is therefore
essential to defer the filing of such Registration Statement. In such event, the Company shall have the right to defer such filing
for a period of not more than thirty (30) days; provided, however, that the Company shall not defer its obligation in this manner
more than once in any 12-month period. Notwithstanding anything to the contrary contained in this Agreement, no Registration shall
be effected or permitted and no Registration Statement shall become effective, with respect to any Registrable Securities held
by any Holder, until after the expiration of the Founder Shares Lock-Up Period or the Private Placement Lock-Up Period, as the
case may be.
ARTICLE III
COMPANY PROCEDURES
3.1 General Procedures. If at any
time on or after the date the Company consummates a Business Combination the Company is required to effect the Registration of
Registrable Securities, the Company shall use its best efforts to effect such Registration to permit the sale of such Registrable
Securities in accordance with the intended plan of distribution thereof, and pursuant thereto the Company shall, as expeditiously
as possible:
3.1.1 prepare and file with the Commission
as soon as practicable a Registration Statement with respect to such Registrable Securities and use its reasonable best efforts
to cause such Registration Statement to become effective and remain effective until all Registrable Securities covered by such
Registration Statement have been sold;
3.1.2 prepare and file with the Commission
such amendments and post-effective amendments to the Registration Statement, and such supplements to the Prospectus, as may be
reasonably requested by the majority-in-interest of the Holders with Registrable Securities registered on such Registration Statement
or any Underwriter of Registrable Securities or as may be required by the rules, regulations or instructions applicable to the
registration form used by the Company or by the Securities Act or rules and regulations thereunder to keep the Registration Statement
effective until all Registrable Securities covered by such Registration Statement are sold in accordance with the intended plan
of distribution set forth in such Registration Statement or supplement to the Prospectus;
3.1.3 prior to filing a Registration Statement
or Prospectus, or any amendment or supplement thereto, furnish without charge to the Underwriters, if any, and the Holders of Registrable
Securities included in such Registration, and such Holders’ legal counsel, copies of such Registration Statement as proposed
to be filed, each amendment and supplement to such Registration Statement (in each case including all exhibits thereto and documents
incorporated by reference therein), the Prospectus included in such Registration Statement (including each preliminary Prospectus),
and such other documents as the Underwriters and the Holders of Registrable Securities included in such Registration or the legal
counsel for any such Holders may request in order to facilitate the disposition of the Registrable Securities owned by such Holders;
3.1.4 prior to any public offering of Registrable
Securities, use its best efforts to (i) register or qualify the Registrable Securities covered by the Registration Statement
under such securities or “blue sky” laws of such jurisdictions in the United States as the Holders of Registrable Securities
included in such Registration Statement (in light of their intended plan of distribution) may request and (ii) take such action
necessary to cause such Registrable Securities covered by the Registration Statement to be registered with or approved by such
other governmental authorities as may be necessary by virtue of the business and operations of the Company and do any and all other
acts and things that may be necessary or advisable to enable the Holders of Registrable Securities included in such Registration
Statement to consummate the disposition of such Registrable Securities in such jurisdictions; provided, however,
that the Company shall not be required to qualify generally to do business in any jurisdiction where it would not otherwise be
required to qualify or take any action to which it would be subject to general service of process or taxation in any such jurisdiction
where it is not then otherwise so subject;
3.1.5 cause all such Registrable Securities
to be listed on each securities exchange or automated quotation system on which similar securities issued by the Company are then
listed;
3.1.6 provide a transfer agent or warrant
agent, as applicable, and registrar for all such Registrable Securities no later than the effective date of such Registration Statement;
3.1.7 advise each seller of such Registrable
Securities, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the Commission
suspending the effectiveness of such Registration Statement or the initiation or threatening of any proceeding for such purpose
and promptly use its reasonable best efforts to prevent the issuance of any stop order or to obtain its withdrawal if such stop
order should be issued;
3.1.8 at least five (5) days prior to the
filing of any Registration Statement or Prospectus or any amendment or supplement to such Registration Statement or Prospectus
or any document that is to be incorporated by reference into such Registration Statement or Prospectus, furnish a copy thereof
to each seller of such Registrable Securities or its counsel;
3.1.9 notify the Holders at any time when
a Prospectus relating to such Registration Statement is required to be delivered under the Securities Act, of the happening of
any event as a result of which the Prospectus included in such Registration Statement, as then in effect, includes a Misstatement,
and then to correct such Misstatement as set forth in Section 3.4 hereof;
3.1.10 permit a representative of the Holders,
the Underwriters, if any, and any attorney or accountant retained by such Holders or Underwriter to participate, at each such person’s
own expense, in the preparation of the Registration Statement, and cause the Company’s officers, directors and employees
to supply all information reasonably requested by any such representative, Underwriter, attorney or accountant in connection with
the Registration; provided, however, that such representatives or Underwriters enter into a confidentiality agreement,
in form and substance reasonably satisfactory to the Company, prior to the release or disclosure of any such information;
3.1.11 obtain a “cold comfort”
letter from the Company’s independent registered public accountants in the event of an Underwritten Registration, in customary
form and covering such matters of the type customarily covered by “cold comfort” letters as the managing Underwriter
may reasonably request, and reasonably satisfactory to a majority-in-interest of the participating Holders;
3.1.12 on the date the Registrable Securities
are delivered for sale pursuant to such Registration, obtain an opinion, dated such date, of counsel representing the Company for
the purposes of such Registration, addressed to the Holders, the placement agent or sales agent, if any, and the Underwriters,
if any, covering such legal matters with respect to the Registration in respect of which such opinion is being given as the Holders,
placement agent, sales agent, or Underwriter may reasonably request and as are customarily included in such opinions and negative
assurance letters, and reasonably satisfactory to a majority in interest of the participating Holders;
3.1.13 in the event of any Underwritten Offering,
enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing Underwriter
of such offering;
3.1.14 make available to its security holders,
as soon as reasonably practicable, an earnings statement covering the period of at least twelve (12) months beginning with the
first day of the Company’s first full calendar quarter after the effective date of the Registration Statement which satisfies
the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or any successor rule promulgated thereafter
by the Commission);
3.1.15 if the Registration involves the Registration
of Registrable Securities involving gross proceeds in excess of $25,000,000, use its reasonable efforts to make available senior
executives of the Company to participate in customary “road show” presentations that may be reasonably requested by
the Underwriter in any Underwritten Offering; and
3.1.16 otherwise, in good faith, cooperate
reasonably with, and take such customary actions as may reasonably be requested by the Holders, in connection with such Registration.
3.2 Registration Expenses. The Registration
Expenses of all Registrations shall be borne by the Company. It is acknowledged by the Holders that the Holders shall bear all
incremental selling expenses relating to the sale of Registrable Securities, such as Underwriters’ commissions and discounts,
brokerage fees, Underwriter marketing costs and, other than as set forth in the definition of “Registration Expenses,”
all reasonable fees and expenses of any legal counsel representing the Holders.
3.3 Requirements for Participation in
Underwritten Offerings. No person may participate in any Underwritten Offering for equity securities of the Company pursuant
to a Registration initiated by the Company hereunder unless such person (i) agrees to sell such person’s securities on the
basis provided in any underwriting arrangements approved by the Company and (ii) completes and executes all customary questionnaires,
powers of attorney, indemnities, lock-up agreements, underwriting agreements and other customary documents as may be reasonably
required under the terms of such underwriting arrangements.
3.4 Suspension of Sales; Adverse Disclosure.
Upon receipt of written notice from the Company that a Registration Statement or Prospectus contains a Misstatement, each of the
Holders shall forthwith discontinue disposition of Registrable Securities until he, she or it has received copies of a supplemented
or amended Prospectus correcting the Misstatement (it being understood that the Company hereby covenants to prepare and file such
supplement or amendment as soon as practicable after the time of such notice), or until he, she or it is advised in writing by
the Company that the use of the Prospectus may be resumed. If the filing, initial effectiveness or continued use of a Registration
Statement in respect of any Registration at any time would require the Company to make an Adverse Disclosure or would require the
inclusion in such Registration Statement of financial statements that are unavailable to the Company for reasons beyond the Company’s
control, the Company may, upon giving prompt written notice of such action to the Holders, delay the filing or initial effectiveness
of, or suspend use of, such Registration Statement for the shortest period of time, but in no event more than ninety (90) days
in any 12-month period, determined in good faith by the Company to be necessary for such purpose. In the event the Company exercises
its rights under the preceding sentence, the Holders agree to suspend, immediately upon their receipt of the notice referred to
above, their use of the Prospectus relating to any Registration in connection with any sale or offer to sell Registrable Securities.
The Company shall immediately notify the Holders of the expiration of any period during which it exercised its rights under this
Section 3.4.
3.5 Reporting Obligations. As long
as any Holder shall own Registrable Securities, the Company, at all times while it shall be a reporting company under the Exchange
Act, covenants to file timely (or obtain extensions in respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to Sections 13(a) or 15(d) of the Exchange Act and to promptly
furnish the Holders with true and complete copies of all such filings. The Company further covenants that it shall take such further
action as any Holder may reasonably request, all to the extent required from time to time to enable such Holder to sell shares
of the Common Stock held by such Holder without registration under the Securities Act within the limitation of the exemptions provided
by Rule 144 promulgated under the Securities Act (or any successor rule promulgated thereafter by the Commission), including providing
any legal opinions, to the extent such exemption is available to Holders at such time. Upon the request of any Holder, the Company
shall deliver to such Holder a written certification of a duly authorized officer as to whether it has complied with such requirements.
3.6 Limitations on Registration Rights.
Notwithstanding anything herein to the contrary, (i) Cowen Investments and Craig-Hallum may not exercise their rights under Sections
2.1 and 2.2 hereunder after five (5) and seven (7) years, respectively, from the effective date of the Company’s
registration statement on Form S-1, and (ii) Cowen Investments and Craig-Hallum may not exercise their rights under Section
2.1 more than one (1) time.
ARTICLE IV
INDEMNIFICATION AND CONTRIBUTION
4.1 Indemnification.
4.1.1 The Company agrees to indemnify, to
the extent permitted by law, each Holder of Registrable Securities, its officers and directors and each person who controls such
Holder (within the meaning of the Securities Act) against all losses, claims, damages, liabilities and expenses (including attorneys’
fees) caused by any untrue or alleged untrue statement of material fact contained in any Registration Statement, Prospectus or
preliminary Prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required
to be stated therein or necessary to make the statements therein not misleading, except insofar as the same are caused by or contained
in any information furnished in writing to the Company by such Holder expressly for use therein. The Company shall indemnify the
Underwriters, their officers and directors and each person who controls such Underwriters (within the meaning of the Securities
Act) to the same extent as provided in the foregoing with respect to the indemnification of the Holder.
4.1.2 In connection with any Registration
Statement in which a Holder of Registrable Securities is participating, such Holder shall furnish to the Company in writing such
information and affidavits as the Company reasonably requests for use in connection with any such Registration Statement or Prospectus
and, to the extent permitted by law, shall indemnify the Company, its directors and officers and agents and each person who controls
the Company (within the meaning of the Securities Act) against any losses, claims, damages, liabilities and expenses (including
without limitation reasonable attorneys’ fees) resulting from any untrue statement of material fact contained in the Registration
Statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto or any omission of a material fact
required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue
statement or omission is contained in any information or affidavit so furnished in writing by such Holder expressly for use therein;
provided, however, that the obligation to indemnify shall be several, not joint and several, among such Holders of
Registrable Securities, and the liability of each such Holder of Registrable Securities shall be in proportion to and limited to
the net proceeds received by such Holder from the sale of Registrable Securities pursuant to such Registration Statement. The Holders
of Registrable Securities shall indemnify the Underwriters, their officers, directors and each person who controls such Underwriters
(within the meaning of the Securities Act) to the same extent as provided in the foregoing with respect to indemnification of the
Company.
4.1.3 Any person entitled to indemnification
herein shall (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification
(provided that the failure to give prompt notice shall not impair any person’s right to indemnification hereunder to the
extent such failure has not materially prejudiced the indemnifying party) and (ii) unless in such indemnified party’s reasonable
judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit
such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such
defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party
without its consent (but such consent shall not be unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim.
No indemnifying party shall, without the consent of the indemnified party, consent to the entry of any judgment or enter into any
settlement which cannot be settled in all respects by the payment of money (and such money is so paid by the indemnifying party
pursuant to the terms of such settlement) or which settlement does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation.
4.1.4 The indemnification provided for under
this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party
or any officer, director or controlling person of such indemnified party and shall survive the transfer of securities. The Company
and each Holder of Registrable Securities participating in an offering also agrees to make such provisions as are reasonably requested
by any indemnified party for contribution to such party in the event the Company’s or such Holder’s indemnification
is unavailable for any reason.
4.1.5 If the indemnification provided under
Section 4.1 hereof from the indemnifying party is unavailable or insufficient to hold harmless an indemnified party
in respect of any losses, claims, damages, liabilities and expenses referred to herein, then the indemnifying party, in lieu of
indemnifying the indemnified party, shall contribute to the amount paid or payable by the indemnified party as a result of such
losses, claims, damages, liabilities and expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying
party and the indemnified party, as well as any other relevant equitable considerations. The relative fault of the indemnifying
party and indemnified party shall be determined by reference to, among other things, whether any action in question, including
any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, was made by,
or relates to information supplied by, such indemnifying party or indemnified party, and the indemnifying party’s and indemnified
party’s relative intent, knowledge, access to information and opportunity to correct or prevent such action; provided,
however, that the liability of any Holder under this subsection 4.1.5 shall be limited to the amount of the
net proceeds received by such Holder in such offering giving rise to such liability. The amount paid or payable by a party as a
result of the losses or other liabilities referred to above shall be deemed to include, subject to the limitations set forth in
subsections 4.1.1, 4.1.2 and 4.1.3 above, any legal or other fees, charges or expenses reasonably incurred
by such party in connection with any investigation or proceeding. The parties hereto agree that it would not be just and equitable
if contribution pursuant to this subsection 4.1.5 were determined by pro rata allocation or by any other method of
allocation, which does not take account of the equitable considerations referred to in this subsection 4.1.5. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution
pursuant to this subsection 4.1.5 from any person who was not guilty of such fraudulent misrepresentation.
ARTICLE V
MISCELLANEOUS
5.1 Notices. Any notice or communication
under this Agreement must be in writing and given by (i) deposit in the United States mail, addressed to the party to be notified,
postage prepaid and registered or certified with return receipt requested, (ii) delivery in person or by courier service providing
evidence of delivery, or (iii) transmission by hand delivery, electronic mail or facsimile. Each notice or communication that
is mailed, delivered, or transmitted in the manner described above shall be deemed sufficiently given, served, sent, and received,
in the case of mailed notices, on the third business day following the date on which it is mailed and, in the case of notices delivered
by courier service, hand delivery, electronic mail or facsimile, at such time as it is delivered to the addressee (with the delivery
receipt or the affidavit of messenger) or at such time as delivery is refused by the addressee upon presentation. Any notice or
communication under this Agreement must be addressed, if to the Company, to: 14 Elm Place, Suite 206, Rye, New York 10580, Attention:
Adam Rothstein, with copy to: BraunHagey & Borden LLP, 351 California Street, 10th Floor, San Francisco, CA 94104, Attention:
Daniel J. Harris, Esq. and Jason R. Sanderson, Esq., email: harris@braunhagey.com and sanderson@braunhagey.com, and, if to any
Holder, at such Holder’s address or facsimile number as set forth in the Company’s books and records. Any party may
change its address for notice at any time and from time to time by written notice to the other parties hereto, and such change
of address shall become effective ten (10) days after delivery of such notice as provided in this Section 5.1.
5.2 Assignment; No Third Party Beneficiaries;
Additional Holders.
5.2.1 This Agreement and the rights, duties
and obligations of the Company hereunder may not be assigned or delegated by the Company in whole or in part.
5.2.2 Prior to the expiration of the Founder
Shares Lock-Up Period or the Private Placement Lock-Up Period, as the case may be, no Holder may assign or delegate such Holder’s
rights, duties or obligations under this Agreement, in whole or in part, except in connection with a transfer of Registrable Securities
by such Holder to a Permitted Transferee, but only if such Permitted Transferee agrees to become bound by the transfer restrictions
set forth in this Agreement and other applicable agreements.
5.2.3 This Agreement and the provisions hereof
shall be binding upon and shall inure to the benefit of each of the parties and its successors and the permitted assigns of the
Holders, which shall include Permitted Transferees.
5.2.4 This Agreement shall not confer any
rights or benefits on any persons that are not parties hereto, other than as expressly set forth in this Agreement and Section 5.2
hereof.
5.2.5 No assignment by any party hereto of
such party’s rights, duties and obligations hereunder shall be binding upon or obligate the Company unless and until the
Company shall have received (i) written notice of such assignment as provided in Section 5.1 hereof and (ii) the
written agreement of the assignee, in a form reasonably satisfactory to the Company, to be bound by the terms and provisions of
this Agreement (which may be accomplished by an addendum or certificate of joinder to this Agreement). Any transfer or assignment
made other than as provided in this Section 5.2 shall be null and void.
5.2.6 Any holder of Working Capital Units
that is not a Holder hereunder shall become party to this Agreement as a “Holder” by written agreement of the holder,
in a form reasonably satisfactory to the Company, to be bound by the terms and provisions of this Agreement (which may be accomplished
by an addendum or certificate of joinder to this Agreement).
5.3 Severability. This Agreement
shall be deemed severable, and the invalidity or unenforceability of any term or provision hereof shall not affect the validity
or enforceability of this Agreement or of any other term or provision hereof. Furthermore, in lieu of any such invalid or unenforceable
term or provision, the parties hereto intend that there shall be added as a part of this Agreement a provision as similar in terms
to such invalid or unenforceable provision as may be possible that is valid and enforceable.
5.4 Counterparts. This Agreement
may be executed in multiple counterparts (including facsimile or PDF counterparts), each of which shall be deemed an original,
and all of which together shall constitute the same instrument, but only one of which need be produced.
5.5 Entire Agreement. This Agreement
(including all agreements entered into pursuant hereto and all certificates and instruments delivered pursuant hereto and thereto)
constitute the entire agreement of the parties with respect to the subject matter hereof and supersede all prior and contemporaneous
agreements, representations, understandings, negotiations and discussions between the parties, whether oral or written.
5.6 Governing Law; Venue. NOTWITHSTANDING
THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY ANY OF THE PARTIES HERETO, THE PARTIES EXPRESSLY AGREE THAT (I) THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE OF NEW YORK AS APPLIED TO AGREEMENTS AMONG NEW YORK RESIDENTS ENTERED
INTO AND TO BE PERFORMED ENTIRELY WITHIN NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAW PROVISIONS OF SUCH JURISDICTION, AND (II)
THE VENUE FOR ANY ACTION TAKEN WITH RESPECT TO THIS AGREEMENT SHALL BE ANY STATE OR FEDERAL COURT IN NEW YORK COUNTY IN THE STATE
OF NEW YORK.
5.7 Waiver of Trial by Jury. Each
party hereby irrevocably and unconditionally waives the right to a trial by jury in any action, suit, counterclaim or other proceeding
(whether based on contract, tort or otherwise) arising out of, connected with or relating to this Agreement, the transactions contemplated
hereby, or the actions of the Sponsor in the negotiation, administration, performance or enforcement hereof.
5.8 Amendments and Modifications.
Upon the written consent of the Company and the Holders of at least a majority in interest of the Registrable Securities at the
time in question, compliance with any of the provisions, covenants and conditions set forth in this Agreement may be waived, or
any of such provisions, covenants or conditions may be amended or modified; provided, however, that notwithstanding the foregoing,
any amendment hereto or waiver hereof that adversely affects one Holder, solely in his, her or its capacity as a holder of the
shares of capital stock of the Company, in a manner that is materially different from the other Holders (in such capacity) shall
require the consent of the Holder so affected. No course of dealing between any Holder or the Company and any other party hereto
or any failure or delay on the part of a Holder or the Company in exercising any rights or remedies under this Agreement shall
operate as a waiver of any rights or remedies of any Holder or the Company. No single or partial exercise of any rights or remedies
under this Agreement by a party shall operate as a waiver or preclude the exercise of any other rights or remedies hereunder or
thereunder by such party. Notwithstanding the foregoing, additional Holders may become party to this Agreement in accordance with
Section 5.2 without the consent of the other parties hereto.
5.9 Titles and Headings. Titles and
headings of sections of this Agreement are for convenience only and shall not affect the construction of any provision of this
Agreement.
5.10 Remedies Cumulative. In the
event that the Company fails to observe or perform any covenant or agreement to be observed or performed under this Agreement,
the Holders may proceed to protect and enforce its rights by suit in equity or action at law, whether for specific performance
of any term contained in this Agreement or for an injunction against the breach of any such term or in aid of the exercise of any
power granted in this Agreement or to enforce any other legal or equitable right, or to take any one or more of such actions, without
being required to post a bond. None of the rights, powers or remedies conferred under this Agreement shall be mutually exclusive,
and each such right, power or remedy shall be cumulative and in addition to any other right, power or remedy, whether conferred
by this Agreement or now or hereafter available at law, in equity, by statute or otherwise.
5.11 Other Registration Rights. The
Company represents and warrants that no person, other than a Holder of Registrable Securities, has any right to require the Company
to register any securities of the Company for sale or to include such securities of the Company in any Registration filed by the
Company for the sale of securities for its own account or for the account of any other person. Further, the Company represents
and warrants that this Agreement supersedes any other registration rights agreement or agreement with similar terms and conditions
and in the event of a conflict between any such agreement or agreements and this Agreement, the terms of this Agreement shall prevail.
5.12 Term. This Agreement shall terminate
with respect to any Holder on the date that such Holder no longer holds any Registrable Securities. The provisions of Section 3.5
and Article IV shall survive any termination.
5.13 Holder Information. Each Holder
agrees, if requested in writing, to represent to the Company the total number of Registrable Securities held by such Holder in
order for the Company to make determinations hereunder.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the undersigned
have caused this Agreement to be executed as of the date first written above.
| |
COMPANY: |
| |
|
| |
890 5th Avenue Partners, Inc. |
| |
|
| |
By: |
|
| |
Name: |
Adam Rothstein |
| |
Title: |
Executive Chairman |
| |
HOLDERS: |
| |
|
| |
200 Park Avenue Partners, LLC |
| |
|
| |
By: |
|
| |
Name: |
Adam Rothstein |
| |
Title: |
Manager |
| |
PA 2 CO-Investment llc |
| |
|
| |
By: |
|
| |
|
| |
Craig-Hallum Capital Group LLC |
| |
|
| |
By: |
|
| |
|
| |
|
|
| |
|
Linda Yaccarino |
| |
|
| |
|
|
| |
|
Scott Flanders |
| |
|
| |
|
|
| |
|
David Bank |
| |
|
| |
|
|
| |
|
Kelli Turner |
| |
|
| |
|
|
| |
|
Jon Jashni |
| |
|
|
| |
|
|
[Signature Page to Registration Rights Agreement]
Exhibit 10.6
PRIVATE PLACEMENT UNIT PURCHASE AGREEMENT
This PRIVATE PLACEMENT
UNIT PURCHASE AGREEMENT (this “Agreement”) is made as of the [●] day of [●], 2021, by and between
890 5th Avenue Partners, Inc., a Delaware corporation (the “Company”), and PA 2 Co-Investment LLC, a Delaware
limited liability company (the “Subscriber”).
WHEREAS, the Company
desires to sell to the Subscriber on a private placement basis (the “Sale”) an aggregate of 75,897 private placement
units (and up to 84,000 units in the aggregate if the underwriters in the IPO exercise their over-allotment option in full) (“Private
Placement Units”) of the Company for a purchase price of $10.00 per Private Placement Unit, each Private Placement Unit
comprised of one share of Class A common stock of the Company, par value $0.0001 per share (“Common Stock”),
and one-third of one redeemable warrant, each whole warrant exercisable to purchase one share of Common Stock (each whole warrant,
a “Warrant”). The shares of Common Stock underlying the Private Warrants (as defined below) are hereinafter
referred to as the “Warrant Shares.” The shares of Common Stock underlying the Private Placement Units (excluding
the Warrant Shares) are hereinafter referred to as the “Private Shares.” The Warrants underlying the Private
Placement Units are hereinafter referred to as the “Private Warrants.” The Private Placement Units, the Private
Shares, the Private Warrants and the Warrant Shares, collectively, are hereinafter referred to as the “Securities.”
Each whole Private Warrant is exercisable to purchase one share of Common Stock at an exercise price of $11.50, subject to the
adjustments as set forth in the Warrant Agreement (as defined below), during the period commencing on the later of (i) twelve (12)
months from the date of the closing of the Company’s initial public offering of units (the “IPO”) and
(ii) 30 days following the consummation of the Company’s initial business combination (the “Business Combination”),
as such term is defined in the registration statement in connection with the IPO, as amended at the time it becomes effective (the
“Registration Statement”), filed with the Securities and Exchange Commission (“SEC”), and
expiring on the fifth anniversary of the consummation of the Business Combination (provided that so long as the Private Warrants
are held by the Subscriber, its designees or affiliates, the Subscriber, its designees or affiliates will not be permitted to exercise
such Private Warrants after the five year anniversary of the effective date of the Registration Statement); and
WHEREAS, the Subscriber
wishes to purchase an aggregate of 75,897 (and up to 84,000 units in the aggregate if the underwriters in the IPO exercise their
over-allotment option in full) Private Placement Units for the Purchase Price (as defined below), and the Company wishes to accept
such subscription from the Subscriber.
NOW, THEREFORE, in
consideration of the premises and the mutual covenants hereinafter set forth and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Company and the Subscriber hereby agree as follows:
| |
1. |
Agreement to Subscribe. |
1.1
Purchase and Issuance of the Private Placement Units.
(a) Upon
the terms and subject to the conditions of this Agreement, the Subscriber hereby agrees to purchase from the Company, and the
Company hereby agrees to sell to the Subscriber, on the Initial Closing Date (as defined below) 75,897 Private Placement Units
in consideration of the payment of the Purchase Price. On the Initial Closing Date, the Company shall, at its option, deliver
to the Subscriber the certificates representing the Securities purchased or effect such delivery in book-entry form.
(a) On
the date of the consummation of the closing of the over-allotment option, if any, in connection with the IPO or on such earlier
time and date as may be mutually agreed by the Subscriber and the Company (an “Over-allotment Closing Date,”
and each Over-allotment Closing Date (if any) and the Initial Closing Date, a “Closing Date”), the Company
shall issue and sell to the Subscriber, and the Subscriber shall purchase from the Company, up to 8,103 additional Private Placement
Units (or, to the extent the over-allotment option is not exercised in full, a lesser number of Private Placement Units in proportion
to the amount of the over-allotment option that is then exercised) at a price of $10.00 per Private Placement Unit for an aggregate
purchase price of up to $81,030 (if the over-allotment option is exercised in full) (such amount, the “Over-allotment
Purchase Price”). The Subscriber shall pay the Over-allotment Purchase Price by wire transfer of immediately available
funds or by such other method as may be reasonably acceptable to the Company, to the trust account (the “Trust Account”)
at a financial institution to be chosen by the Company, maintained by Continental Stock Transfer & Trust Company, acting as
trustee (“Continental”), on or prior to the Over-allotment Closing Date. On the Over-allotment Closing Date,
upon the payment by the Subscriber of the Over-allotment Purchase Price, the Company shall, at its option, deliver a certificate
evidencing the Private Placement Units purchased by the Subscriber on such date duly registered in the Subscriber’s name
to the Subscriber, or effect such delivery in book-entry form.
1.2 Purchase Price. As payment in full for the Private Placement Units being purchased under this Agreement at the Initial Closing
(as defined below), the Subscriber shall pay $758,970 (the “Purchase Price”) by wire transfer of immediately
available funds or by such other method as may be reasonably acceptable to the Company, to the Trust Account at a financial institution
to be chosen by the Company, maintained by Continental, on or prior to the Initial Closing Date.
1.3 Closing. The closing of the purchase and sale of the Private Placement Units (the “Initial Closing Date” and
the Initial Closing and each other closing, a “Closing”) shall take place on the date of the closing of the
IPO. Each Closing shall take place at the offices of the Company, or remotely via electronic exchange or at such other place or
method as may be agreed upon by the parties hereto.
1.4 Conditions to Closing.
| (a) | Conditions of the Subscriber’s Obligations. The obligation of the Subscriber
to purchase and pay for the Private Placement Units is subject to the fulfillment, on or before each Closing Date, of each of the
following conditions. |
| a. | The representations and warranties of the Company contained in Section 3 shall be true and
correct at and as of such Closing Date as though then made. |
| b. | The Company shall have performed and complied with all agreements, obligations and conditions contained
in this Agreement that are required to be performed or complied with by it on or before such Closing Date. |
| c. | No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have
been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory
organization having authority over the matters contemplated hereby, which prohibits the consummation of any of the transactions
contemplated by this Agreement or the Warrant Agreement. |
| d. | The Company shall have entered into the Warrant Agreement and the Registration Rights Agreement
(as defined below), in each case on terms satisfactory to the Subscriber. |
| (b) | Conditions of the Company’s Obligations. The obligations of the Company to the Subscriber
under this Agreement are subject to the fulfillment, on or before each Closing Date, of each of the following conditions. |
| a. | The representations and warranties of the Subscriber contained in Section 2 shall be true
and correct at and as of such Closing Date as though then made. |
| b. | The Subscriber shall have performed and complied with all agreements, obligations and conditions
contained in this Agreement that are required to be performed or complied with by the Subscriber on or before such Closing Date. |
| c. | The Company shall have obtained the consent of its Board of Directors authorizing the execution,
delivery and performance of this Agreement, the Registration Rights Agreement and the Warrant
Agreement and the issuance and sale of the Private Placement Units hereunder. |
| d. | No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have
been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory
organization having authority over the matters contemplated hereby, which prohibits the consummation of any of the transactions
contemplated by this Agreement or the Warrant Agreement. |
1.5 Termination. This Agreement and each of the obligations of the undersigned shall be null and void and without effect if the Closing
does not occur on prior to June 30, 2021 or if that certain Underwriting Agreement, dated as of the date hereof, by and among
the Company, Cowen and Company, LLC and Craig-Hallum Capital Group LLC regarding the IPO (the “Underwriting Agreement”),
is terminated for any reason.
| |
2. |
Representations and Warranties of the Subscriber. |
Subscriber represents
and warrants to the Company that:
2.1 No Government Recommendation or Approval. Subscriber understands that no federal or state agency has passed upon or made any recommendation
or endorsement of the Company or the Sale of the Securities.
2.2 Accredited Investor. Subscriber represents that it is an “accredited investor” as such term is defined in Rule 501(a)
of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”), and acknowledges that the
Sale is being made in reliance, among other things, on a private placement exemption to “accredited investors” under
the Securities Act and similar exemptions under state law.
2.3 Intent. Subscriber is purchasing the Securities solely for investment purposes, for Subscriber’s own account (and/or for
the account or benefit of its members or affiliates, as permitted, pursuant to the terms of an agreement (the “Insider
Letter”) to be entered into with respect to the Securities between, among others, Subscriber and the Company, as described
in the Registration Statement), and not with a view to the distribution thereof and Subscriber has no present arrangement to sell
the Securities to or through any person or entity except as may be permitted hereunder. The Subscriber shall not engage in hedging
transactions with regard to the Securities unless in compliance with the Securities Act.
2.4 Restrictions on Transfer. Subscriber acknowledges and understands the Private Placement Units are being offered in a transaction
not involving a public offering in the United States within the meaning of the Securities Act. The Securities have not been registered
under the Securities Act and, if in the future Subscriber decides to offer, resell, pledge or otherwise transfer the Securities,
such Securities may be offered, resold, pledged or otherwise transferred only pursuant to (i) an effective registration statement
filed under the Securities Act, (ii) an exemption from registration under Rule 144 promulgated under the Securities Act, if available,
or (iii) any other available exemption from the registration requirements of the Securities Act, and in each case in accordance
with any applicable securities laws of any state or any other jurisdiction. Notwithstanding the foregoing, Subscriber acknowledges
and understands the Securities are subject to transfer restrictions as described herein and in the Insider Letter. Subscriber agrees
that if any transfer of its Securities or any interest therein is proposed to be made, as a condition precedent to any such transfer,
Subscriber may be required to deliver to the Company an opinion of counsel satisfactory to the Company with respect to such transfer.
Absent registration or another available exemption from registration, Subscriber agrees it will not resell the Securities (unless
otherwise permitted pursuant to the terms hereof). Subscriber further acknowledges that because the Company is a shell company,
Rule 144 may not be available to Subscriber for the resale of the Securities until the one year anniversary following consummation
of the Business Combination of the Company, despite technical compliance with the requirements of Rule 144 and the release or waiver
of any contractual transfer restrictions.
2.5 Sophisticated Investor.
(a) Subscriber is sophisticated in financial matters and is able to evaluate the risks and benefits of the investment in the Securities.
(b) Subscriber
is aware that an investment in the Securities is highly speculative and subject to substantial risks because, among other things,
the Securities are subject to transfer restrictions and have not been registered under the Securities Act and therefore cannot
be sold unless subsequently registered under the Securities Act or an exemption from such registration is available. Subscriber
is able to bear the economic risk of its investment in the Securities for an indefinite period of time.
2.6 Organization and Authority. Subscriber is duly organized, validly existing and in good standing under the laws of its state of
incorporation or formation and it possesses all requisite power and authority necessary to carry out the transactions contemplated
by this Agreement.
2.7 Authority. This Agreement has been validly authorized, executed and delivered by Subscriber and is a valid and binding agreement
enforceable in accordance with its terms, subject to the general principles of equity and to bankruptcy or other laws affecting
the enforcement of creditors’ rights generally.
2.8 No Conflicts. The execution, delivery and performance of this Agreement and the consummation by Subscriber of the transactions
contemplated hereby do not violate, conflict with or constitute a default under (i) Subscriber’s charter documents, (ii)
any agreement or instrument to which Subscriber is a party or (iii) any law, statute, rule or regulation to which Subscriber is
subject, or any agreement, order, judgment or decree to which Subscriber is subject.
2.9 No Legal Advice from Company. Subscriber acknowledges it has had the opportunity to review this Agreement and the transactions
contemplated by this Agreement and the other agreements entered into between the parties hereto with Subscriber’s own legal
counsel and investment and tax advisors. Except for any statements or representations of the Company made in this Agreement and
the other agreements entered into between the parties hereto, Subscriber is relying solely on such counsel and advisors and not
on any statements or representations of the Company or any of its representatives or agents for legal, tax or investment advice
with respect to this investment, the transactions contemplated by this Agreement or the securities laws of any jurisdiction.
2.10 Reliance on Representations and Warranties. The Subscriber understands the Private Placement Units are being offered and sold to
the Subscriber in reliance on exemptions from the registration requirements under the Securities Act, and analogous provisions
in the laws and regulations of various states, and that the Company is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understandings of the Subscriber set forth in this Agreement in order to determine
the applicability of such provisions.
2.11 No General Solicitation. Subscriber is not subscribing for the Private Placement Units as a result of or subsequent to any general
solicitation or general advertising, including but not limited to any advertisement, article, notice or other communication published
in any newspaper, magazine, or similar media or broadcast over television or radio, or presented at any seminar or meeting or in
the Registration Statement.
2.12 Legend. Subscriber acknowledges and agrees that each of the Private Placement Units and the shares of Common Stock included in
the Private Placement Units shall bear a restrictive legend substantially in the form set forth in Section 4.1 below, the Private
Warrants shall bear the legend substantially in the form set forth in the Warrant Agreement, and that the Securities will be subject
to appropriate “stop transfer restrictions.”
| |
3. |
Representations, Warranties and Covenants of the Company. |
The Company represents
and warrants to, and agrees with, Subscriber that:
3.1 Valid
Issuance of Capital Stock. The total number of shares of all classes of capital stock which the Company has authority to
issue is 500,000,000 shares of Class A Common Stock, 25,000,000 shares of Class F Common Stock, $0.0001 par value per share
(the “Class F Common Stock”), and 5,000,000 shares of preferred stock, $0.0001 par value per share
(“Preferred Stock”). As of the date hereof, the Company has issued and outstanding 7,187,500 shares
of Class F Common Stock (of which up to 937,500 shares are subject to forfeiture as described in the Registration Statement),
no shares of Class A Common Stock and no shares of Preferred Stock. All of the issued shares of capital stock of the Company
have been duly authorized, validly issued, and are fully paid and non-assessable.
3.2 Title to Securities. Upon issuance in accordance with, and payment pursuant to, the terms hereof and that certain warrant agreement
(the “Warrant Agreement”) to be entered into between the Company and Continental, as warrant agent, as the
case may be, each of the Private Placement Units, Private Shares, Private Warrants and Warrant Shares will be duly and validly
issued, fully paid and non-assessable. On the date of issuance of the Private Placement Units and Warrant Shares shall have been
reserved for issuance. Upon issuance in accordance with, and payment pursuant to, the terms hereof and the Warrant Agreement,
as the case may be, Subscriber will have or receive good title to the Private Placement Units, Private Shares and Private Warrants,
free and clear of all liens, claims and encumbrances of any kind, other than (i) transfer restrictions hereunder and (ii) transfer
restrictions under federal and state securities laws.
3.3 Organization and Qualification. The Company is a corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has the requisite corporate power to own its properties and assets and to carry on its business
as now being conducted.
3.4 Authorization; Enforcement. (i) The Company has the requisite corporate power and authority to enter into and perform its obligations
under this Agreement and to issue the Securities in accordance with the terms hereof, (ii) the execution, delivery and performance
of this Agreement by the Company and the consummation by it of the transactions contemplated hereby have been duly authorized by
all necessary corporate action, and no further consent or authorization of the Company or its Board of Directors or stockholders
is required, and (iii) this Agreement constitutes valid and binding obligations of the Company enforceable against the Company
in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, fraudulent conveyance,
moratorium, reorganization, or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and
remedies or by equitable principles of general application and except as enforcement of rights to indemnity and contribution may
be limited by federal and state securities laws or principles of public policy.
3.5 No Conflicts. The execution, delivery and performance of this Agreement and the consummation by the Company of the transactions
contemplated hereby do not (i) result in a violation of the Company’s certificate of incorporation or by-laws, (ii) conflict
with, or constitute a default under any agreement or instrument to which the Company is a party or (iii) any law statute, rule
or regulation to which the Company is subject or any agreement, order, judgment or decree to which the Company is subject. Other
than any SEC or state securities filings which may be required to be made by the Company subsequent to the Closing Date, and any
registration statement which may be filed pursuant thereto, the Company is not required under federal, state or local law, rule
or regulation to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental
agency or self-regulatory entity in order for it to perform any of its obligations under this Agreement or issue the Private Placement
Units, Private Shares, Private Warrants or Warrant Shares in accordance with the terms hereof.
3.6 Additional Representations and Warranties. The representations and warranties of the Company set forth in the Underwriting Agreement
are hereby incorporated herein and are true and correct with the same force and effect as though expressly made herein as of the
date hereof.
3.7
Regulation D Qualification. Neither the Company nor, to its knowledge, any of its affiliates, members, officers, directors or beneficial
shareholders of 20% or more of its outstanding securities, has experienced a disqualifying event as enumerated pursuant to Rule
506(d) of Regulation D under the Securities Act.
4.1 Legend. The Company will issue the Private Placement Units and Private Shares and, when issued, the Warrant Shares, purchased by
the Subscriber in the name of the Subscriber, and such securities will bear the following legend:
“THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR SUCH LAWS OR AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT AND SUCH LAWS WHICH, IN THE OPINION OF COUNSEL FOR THIS COMPANY, IS AVAILABLE.”
“THE
SECURITIES REPRESENTED hereby ARE SUBJECT TO LOCKUP PURSUANT TO A letter agreement by and among 890 5th Avenue Partners, Inc.,
PA 2 Co-Investment LLC, Craig-Hallum Capital Group LLC AND THE OTHER PARTIES THERETO, AND
MAY ONLY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED DURING THE TERM OF THE LOCKUP PURSUANT TO THE TERMS SET FORTH
IN such letter AGREEMENT.”
“SECURITIES
EVIDENCED HEREBY SHALL BE ENTITLED TO REGISTRATION RIGHTS UNDER A REGISTRATION RIGHTS AGREEMENT WITH THE COMPANY.”
4.2 Subscriber’s Compliance. Nothing in this Section 4 shall affect in any way the Subscriber’s obligations and agreements
to comply with all applicable securities laws upon resale of the Securities.
4.3 Company’s Refusal to Register Transfer of the Securities. The Company shall refuse to register any transfer of the Securities,
if in the sole judgment of the Company such purported transfer would not be made (i) pursuant to an effective registration statement
filed under the Securities Act, or pursuant to an available exemption from the registration requirements of the Securities Act
and (ii) in compliance herewith.
4.4 Registration Rights. The Subscriber will be entitled to certain registration rights which will be governed by a registration rights
agreement (“Registration Rights Agreement”) to be entered into among the Subscriber, the Company and others,
on or prior to the effective date of the Registration Statement.
| |
5. |
Waiver of Liquidation Distributions. |
In connection with
the Securities purchased pursuant to this Agreement, Subscriber hereby waives any and all right, title, interest or claim of any
kind in or to any distributions of the amounts in the Trust Account with respect to the Securities, whether (i) in connection with
the exercise of redemption rights if the Company consummates the Business Combination, (ii) in connection with any tender offer
conducted by the Company prior to a Business Combination, (iii) upon the Company’s redemption of shares of Common Stock sold
in the Company’s IPO upon the Company’s failure to timely complete the Business Combination or (iv) in connection with
a stockholder vote to approve an amendment to the Company’s amended and restated certificate of incorporation, (A) to modify
the substance or timing of the Company’s obligation to redeem 100% of the shares of Common Stock sold in the IPO if the Company
does complete the Business Combination within 24 months of the closing of the IPO or (B) with respect to any other provision relating
to stockholders’ rights or pre-Business Combination activity. In the event Subscriber purchases shares of Common Stock in
the IPO or in the aftermarket, any additional shares so purchased shall be eligible to receive the redemption value of such shares
of Common Stock upon the same terms offered to all other purchasers of Common Stock in the IPO in the event the Company fails to
consummate the Business Combination within the time period set forth in the Company’s certificate of incorporation, as amended
from time to time.
| |
6. |
Terms of Private Warrants. Each Private Warrant shall have the terms set forth in the Warrant Agreement. |
7. FINRA
Considerations. Subscriber acknowledges and agrees that the Private Placement Units and their component parts and the related
registration rights will be deemed compensation by the Financial Industry Regulatory Authority (“FINRA”) and
will therefore, pursuant to FINRA Rule 5110(e), be subject to lock-up for a period of 180 days immediately following the date
of effectiveness or commencement of sales in the IPO, subject to FINRA Rule 5110(e)(2). Additionally, the Private Placement Units
and their component parts and the related registration rights may not be sold, transferred, assigned, pledged or hypothecated
during the foregoing 180 day period following the effective date of the Registration Statement except to any underwriter or selected
dealer participating in the IPO and the bona fide officers or partners of any Subscriber and any such participating underwriter
or selected dealer. Additionally, the Private Placement Units and their component parts and the related registration rights will
not be the subject of any hedging, short sale, derivative, put or call transaction that would result in the economic disposition
of such securities by any person for a period of 180 days immediately following the date of effectiveness or commencement of sales
in the IPO.
| |
8. |
Terms of the Private Placement Units and Private Warrants. |
8.1 The Private Placement Units and their component parts are substantially identical to the units to be offered in the IPO except
that: (i) the Private Placement Units and component parts will not, except in limited circumstances, be transferable or salable
until 30 days after the completion of the Company’s Business Combination, (ii) the Private Warrants will be non-redeemable
and may be exercisable on a “cashless” basis if held by Subscriber or its permitted transferees, as further described
in the Warrant Agreement, (iii) the Private Warrants may not be exercised after the five year anniversary of the effective date
of the Registration Statement pursuant to FINRA Rule 5110(g)(8) and (iv) the Private Placement Units and component parts are being
purchased pursuant to an exemption from the registration requirements of the Securities Act and will become freely tradable only
after the expiration of the lockup described above in clause (i) and they are registered pursuant to the Registration Rights Agreement
or an exemption from registration under the Securities Act is available.
8.2 Subscriber agrees to vote the Private Shares in accordance with the terms of the Insider Letter and as otherwise described in the
Registration Statement.
| |
9. |
Governing Law; Jurisdiction; Waiver of Jury Trial. |
This Agreement shall
be governed by and construed in accordance with the laws of the State of Delaware for agreements made and to be wholly performed
within such state. The parties hereto hereby waive any right to a jury trial in connection with any litigation pursuant to this
Agreement and the transactions contemplated hereby.
| |
10. |
Assignment; Entire Agreement; Amendment. |
10.1 Assignment. Neither this Agreement nor any rights hereunder may be assigned by any party to any other person other than by Subscriber
to a person agreeing to be bound by the terms hereof.
10.2 Entire Agreement. This Agreement sets forth the entire agreement and understanding between the parties as to the subject matter
thereof and merges and supersedes all prior discussions, agreements and understandings of any and every nature among them.
10.3 Amendment. Except as expressly provided in this Agreement, neither this Agreement nor any term hereof may be amended, waived, discharged
or terminated other than by a written instrument signed by all of the parties hereto.
10.4 Binding upon Successors. This Agreement shall be binding upon and inure to the benefit of the parties hereto and to their respective
heirs, legal representatives, successors and permitted assigns.
Unless otherwise
provided herein, any notice or other communication to a party hereunder shall be sufficiently given if in writing and
personally delivered or sent by facsimile or other electronic transmission with copy sent in another manner herein provided
or sent by courier (which for all purposes of this Agreement shall include Federal Express or other recognized overnight
courier) or mailed to said party by certified mail, return receipt requested, at its address provided for herein or such
other address as either may designate for itself in such notice to the other. Communications shall be deemed to have been
received when delivered personally, on the scheduled arrival date when sent by next day or 2nd-day courier service, or if
sent by facsimile upon receipt of confirmation of transmittal or, if sent by mail, then three days after deposit in the mail.
If given by electronic transmission, such notice shall be deemed to be delivered (i) if by electronic mail, when directed to
an electronic mail address at which the stockholder has consented to receive notice; (ii) if by a posting on an electronic
network together with separate notice to the stockholder of such specific posting, upon the later of (1) such posting and (2)
the giving of such separate notice; and (iii) if by any other form of electronic transmission, when directed to the
stockholder.
| |
12. |
Counterparts; Electronic Signatures. |
This Agreement may
be executed in counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together
shall constitute one and the same instrument. The words “execution,” “signed,” “signature,”
and words of like import in this Agreement or in any other certificate, agreement or document related to this Agreement shall include
images of manually executed signatures transmitted by facsimile or other electronic format (including, without limitation, “pdf,”
“tif” or “jpg”) and other electronic signatures (including, without limitation, DocuSign and AdobeSign). The
use of electronic signatures and electronic records (including, without limitation, any contract or other record created, generated,
sent, communicated, received, or stored by electronic means) shall be of the same legal effect, validity and enforceability as
a manually executed signature or use of a paper-based record-keeping system to the fullest extent permitted by applicable law.
| |
13. |
Survival; Severability. |
13.1 Survival. The representations, warranties, covenants and agreements of the parties hereto shall survive each Closing Date.
13.2 Severability. In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to
be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision; provided that
no such severability shall be effective if it materially changes the economic benefit of this Agreement to any party.
The titles and subtitles
used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.
[The remainder of this page has been
intentionally left blank.]
IN WITNESS WHEREOF,
the parties hereto have executed this Agreement to be effective as of the date first set forth above.
| |
COMPANY: |
| |
|
| |
890 5th Avenue Partners, Inc. |
| |
|
| |
By: |
|
| |
|
Name: Adam Rothstein |
| |
|
Title: Executive Chairman |
| |
|
|
| |
SUBSCRIBER: |
| |
|
| |
PA 2 Co-Investment LLC |
| |
By: Cowen Investments II LLC, its Sole Member |
| |
|
| |
By: |
|
| |
|
Name: |
| |
|
Title: |
[Signature Page to Private Placement
Unit Purchase Agreement]
Exhibit 10.9
PRIVATE PLACEMENT UNIT PURCHASE AGREEMENT
This PRIVATE
PLACEMENT UNIT PURCHASE AGREEMENT (this “Agreement”) is made as of the [●] day of [●], 2021,
by and between 890 5th Avenue Partners, Inc., a Delaware corporation (the “Company”), and [●] (the
“Subscriber”).
WHEREAS, the Company
desires to sell to the Subscriber on a private placement basis (the “Sale”) an aggregate of [●] private placement
units (and up to[●] units in the aggregate if the underwriters in the IPO exercise their over-allotment option in full) (“Private
Placement Units”) of the Company for a purchase price of $10.00 per Private Placement Unit, each Private Placement Unit
comprised of one share of Class A common stock of the Company, par value $0.0001 per share (“Common Stock”),
and one-third of one redeemable warrant, each whole warrant exercisable to purchase one share of Common Stock (each whole warrant,
a “Warrant”). The shares of Common Stock underlying the Private Warrants (as defined below) are hereinafter
referred to as the “Warrant Shares.” The shares of Common Stock underlying the Private Placement Units (excluding
the Warrant Shares) are hereinafter referred to as the “Private Shares.” The Warrants underlying the Private
Placement Units are hereinafter referred to as the “Private Warrants.” The Private Placement Units, the Private
Shares, the Private Warrants and the Warrant Shares, collectively, are hereinafter referred to as the “Securities.”
Each whole Private Warrant is exercisable to purchase one share of Common Stock at an exercise price of $11.50, subject to the
adjustments as set forth in the Warrant Agreement (as defined below), during the period commencing on the later of (i) twelve (12)
months from the date of the closing of the Company’s initial public offering of units (the “IPO”) and
(ii) 30 days following the consummation of the Company’s initial business combination (the “Business Combination”),
as such term is defined in the registration statement in connection with the IPO, as amended at the time it becomes effective (the
“Registration Statement”), filed with the Securities and Exchange Commission (“SEC”), and
expiring on the fifth anniversary of the consummation of the Business Combination (provided that so long as the Private Warrants
are held by the Subscriber, its designees or affiliates, the Subscriber, its designees or affiliates will not be permitted to exercise
such Private Warrants after the five year anniversary of the effective date of the Registration Statement); and
WHEREAS, the Subscriber
wishes to purchase an aggregate of [●] (and up to [●] units in the aggregate if the underwriters in the IPO exercise their
over-allotment option in full) Private Placement Units for the Purchase Price (as defined below), and the Company wishes to accept
such subscription from the Subscriber.
NOW, THEREFORE, in
consideration of the premises and the mutual covenants hereinafter set forth and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Company and the Subscriber hereby agree as follows:
| |
1. |
Agreement to Subscribe. |
1.1
Purchase and Issuance of the Private Placement Units.
(a)
Upon the terms and subject to the conditions of this Agreement, the Subscriber hereby agrees to purchase from the Company, and
the Company hereby agrees to sell to the Subscriber, on the Initial Closing Date (as defined below) [●] Private Placement Units
in consideration of the payment of the Purchase Price. On the Initial Closing Date, the Company shall, at its option, deliver to
the Subscriber the certificates representing the Securities purchased or effect such delivery in book-entry form.
(a) On
the date of the consummation of the closing of the over-allotment option, if any, in connection with the IPO or on such earlier
time and date as may be mutually agreed by the Subscriber and the Company (an “Over-allotment Closing Date,”
and each Over-allotment Closing Date (if any) and the Initial Closing Date, a “Closing Date”), the Company shall
issue and sell to the Subscriber, and the Subscriber shall purchase from the Company, up to [●] additional Private Placement
Units (or, to the extent the over-allotment option is not exercised in full, a lesser number of Private Placement Units in proportion
to the amount of the over-allotment option that is then exercised) at a price of $10.00 per Private Placement Unit for an aggregate
purchase price of up to [●] (if the over-allotment option is exercised in full) (such amount, the “Over-allotment
Purchase Price”). The Subscriber shall pay the Over-allotment Purchase Price by wire transfer of immediately available
funds or by such other method as may be reasonably acceptable to the Company, to the trust account (the “Trust Account”)
at a financial institution to be chosen by the Company, maintained by Continental Stock Transfer & Trust Company, acting as
trustee (“Continental”), on or prior to the Over-allotment Closing Date. On the Over-allotment Closing Date,
upon the payment by the Subscriber of the Over-allotment Purchase Price, the Company shall, at its option, deliver a certificate
evidencing the Private Placement Units purchased by the Subscriber on such date duly registered in the Subscriber’s name
to the Subscriber, or effect such delivery in book-entry form.
1.2
Purchase Price. As payment in full for the Private Placement Units being purchased under this Agreement at the Initial Closing
(as defined below), the Subscriber shall pay [●] (the “Purchase Price”) by wire transfer of immediately
available funds or by such other method as may be reasonably acceptable to the Company, to the Trust Account at a financial institution
to be chosen by the Company, maintained by Continental, on or prior to the Initial Closing Date.
1.3
Closing. The closing of the purchase and sale of the Private Placement Units (the “Initial Closing Date” and
the Initial Closing and each other closing, a “Closing”) shall take place on the date of the closing of the
IPO. Each Closing shall take place at the offices of the Company, or remotely via electronic exchange or at such other place or
method as may be agreed upon by the parties hereto.
1.4
Conditions to Closing.
| (a) | Conditions of the Subscriber’s Obligations. The obligation of the Subscriber
to purchase and pay for the Private Placement Units is subject to the fulfillment, on or before each Closing Date, of each of the
following conditions. |
| a. | The representations and warranties of the Company contained in Section 3 shall be true and
correct at and as of such Closing Date as though then made. |
| b. | The Company shall have performed and complied with all agreements, obligations and conditions contained
in this Agreement that are required to be performed or complied with by it on or before such Closing Date. |
| c. | No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have
been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory
organization having authority over the matters contemplated hereby, which prohibits the consummation of any of the transactions
contemplated by this Agreement or the Warrant Agreement. |
| d. | The Company shall have entered into the Warrant Agreement and the Registration Rights Agreement
(as defined below), in each case on terms satisfactory to the Subscriber. |
| (b) | Conditions of the Company’s Obligations. The obligations of the Company to the Subscriber
under this Agreement are subject to the fulfillment, on or before each Closing Date, of each of the following conditions. |
| a. | The representations and warranties of the Subscriber contained in Section 2 shall be true
and correct at and as of such Closing Date as though then made. |
| b. | The Subscriber shall have performed and complied with all agreements, obligations and conditions
contained in this Agreement that are required to be performed or complied with by the Subscriber on or before such Closing Date. |
| c. | The Company shall have obtained the consent of its Board of Directors authorizing the execution,
delivery and performance of this Agreement, the Registration Rights Agreement and the Warrant Agreement and the issuance and sale
of the Private Placement Units hereunder. |
| d. | No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have
been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory
organization having authority over the matters contemplated hereby, which prohibits the consummation of any of the transactions
contemplated by this Agreement or the Warrant Agreement. |
1.5
Termination. This Agreement and each of the obligations of the undersigned shall be null and void and without effect if the Closing
does not occur on prior to June 30, 2021 or if that certain Underwriting Agreement, dated as of the date hereof, by and among the
Company, Cowen and Company, LLC and Craig-Hallum Capital Group LLC regarding the IPO (the “Underwriting Agreement”),
is terminated for any reason.
| |
2. |
Representations and Warranties of the Subscriber. |
Subscriber represents
and warrants to the Company that:
2.1
No Government Recommendation or Approval. Subscriber understands that no federal or state agency has passed upon or made any recommendation
or endorsement of the Company or the Sale of the Securities.
2.2
Accredited Investor. Subscriber represents that it is an “accredited investor” as such term is defined in Rule 501(a)
of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”), and acknowledges that the
Sale is being made in reliance, among other things, on a private placement exemption to “accredited investors” under
the Securities Act and similar exemptions under state law.
2.3
Intent. Subscriber is purchasing the Securities solely for investment purposes, for Subscriber’s own account (and/or for
the account or benefit of its members or affiliates, as permitted, pursuant to the terms of an agreement (the “Insider
Letter”) to be entered into with respect to the Securities between, among others, Subscriber and the Company, as described
in the Registration Statement), and not with a view to the distribution thereof and Subscriber has no present arrangement to sell
the Securities to or through any person or entity except as may be permitted hereunder. The Subscriber shall not engage in hedging
transactions with regard to the Securities unless in compliance with the Securities Act.
2.4
Restrictions on Transfer. Subscriber acknowledges and understands the Private Placement Units are being offered in a transaction
not involving a public offering in the United States within the meaning of the Securities Act. The Securities have not been registered
under the Securities Act and, if in the future Subscriber decides to offer, resell, pledge or otherwise transfer the Securities,
such Securities may be offered, resold, pledged or otherwise transferred only pursuant to (i) an effective registration statement
filed under the Securities Act, (ii) an exemption from registration under Rule 144 promulgated under the Securities Act, if available,
or (iii) any other available exemption from the registration requirements of the Securities Act, and in each case in accordance
with any applicable securities laws of any state or any other jurisdiction. Notwithstanding the foregoing, Subscriber acknowledges
and understands the Securities are subject to transfer restrictions as described herein and in the Insider Letter. Subscriber agrees
that if any transfer of its Securities or any interest therein is proposed to be made, as a condition precedent to any such transfer,
Subscriber may be required to deliver to the Company an opinion of counsel satisfactory to the Company with respect to such transfer.
Absent registration or another available exemption from registration, Subscriber agrees it will not resell the Securities (unless
otherwise permitted pursuant to the terms hereof). Subscriber further acknowledges that because the Company is a shell company,
Rule 144 may not be available to Subscriber for the resale of the Securities until the one year anniversary following consummation
of the Business Combination of the Company, despite technical compliance with the requirements of Rule 144 and the release or waiver
of any contractual transfer restrictions.
2.5
Sophisticated Investor.
(a)
Subscriber is sophisticated in financial matters and is able to evaluate the risks and benefits of the investment in the Securities.
(b)
Subscriber is aware that an investment in the Securities is highly speculative and subject to substantial risks because, among
other things, the Securities are subject to transfer restrictions and have not been registered under the Securities Act and therefore
cannot be sold unless subsequently registered under the Securities Act or an exemption from such registration is available. Subscriber
is able to bear the economic risk of its investment in the Securities for an indefinite period of time.
2.6
Organization and Authority. Subscriber is duly organized, validly existing and in good standing under the laws of its state of
incorporation or formation and it possesses all requisite power and authority necessary to carry out the transactions contemplated
by this Agreement.
2.7
Authority. This Agreement has been validly authorized, executed and delivered by Subscriber and is a valid and binding agreement
enforceable in accordance with its terms, subject to the general principles of equity and to bankruptcy or other laws affecting
the enforcement of creditors’ rights generally.
2.8
No Conflicts. The execution, delivery and performance of this Agreement and the consummation by Subscriber of the transactions
contemplated hereby do not violate, conflict with or constitute a default under (i) Subscriber’s charter documents, (ii)
any agreement or instrument to which Subscriber is a party or (iii) any law, statute, rule or regulation to which Subscriber is
subject, or any agreement, order, judgment or decree to which Subscriber is subject.
2.9
No Legal Advice from Company. Subscriber acknowledges it has had the opportunity to review this Agreement and the transactions
contemplated by this Agreement and the other agreements entered into between the parties hereto with Subscriber’s own legal
counsel and investment and tax advisors. Except for any statements or representations of the Company made in this Agreement and
the other agreements entered into between the parties hereto, Subscriber is relying solely on such counsel and advisors and not
on any statements or representations of the Company or any of its representatives or agents for legal, tax or investment advice
with respect to this investment, the transactions contemplated by this Agreement or the securities laws of any jurisdiction.
2.10
Reliance on Representations and Warranties. The Subscriber understands the Private Placement Units are being offered and sold to
the Subscriber in reliance on exemptions from the registration requirements under the Securities Act, and analogous provisions
in the laws and regulations of various states, and that the Company is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understandings of the Subscriber set forth in this Agreement in order to determine
the applicability of such provisions.
2.11
No General Solicitation. Subscriber is not subscribing for the Private Placement Units as a result of or subsequent to any general
solicitation or general advertising, including but not limited to any advertisement, article, notice or other communication published
in any newspaper, magazine, or similar media or broadcast over television or radio, or presented at any seminar or meeting or in
the Registration Statement.
2.12
Legend. Subscriber acknowledges and agrees that each of the Private Placement Units and the shares of Common Stock included in
the Private Placement Units shall bear a restrictive legend substantially in the form set forth in Section 4.1 below, the Private
Warrants shall bear the legend substantially in the form set forth in the Warrant Agreement, and that the Securities will be subject
to appropriate “stop transfer restrictions.”
| |
3. |
Representations, Warranties and Covenants of the Company. |
The Company represents
and warrants to, and agrees with, Subscriber that:
3.1
Valid Issuance of Capital Stock. The total number of shares of all classes of capital stock which the Company has authority to
issue is 500,000,000 shares of Class A Common Stock, 25,000,000 shares of Class F Common Stock, $0.0001 par value per share (the
“Class F Common Stock”), and 5,000,000 shares of preferred stock, $0.0001 par value per share (“Preferred
Stock”). As of the date hereof, the Company has issued and outstanding 7,187,500 shares of Class F Common Stock
(of which up to 937,500 shares are subject to forfeiture as described in the Registration Statement), no shares of Class A Common
Stock and no shares of Preferred Stock. All of the issued shares of capital stock of the Company have been duly authorized, validly
issued, and are fully paid and non-assessable.
3.2
Title to Securities. Upon issuance in accordance with, and payment pursuant to, the terms hereof and that certain warrant agreement
(the “Warrant Agreement”) to be entered into between the Company and Continental, as warrant agent, as the case
may be, each of the Private Placement Units, Private Shares, Private Warrants and Warrant Shares will be duly and validly issued,
fully paid and non-assessable. On the date of issuance of the Private Placement Units and Warrant Shares shall have been reserved
for issuance. Upon issuance in accordance with, and payment pursuant to, the terms hereof and the Warrant Agreement, as the case
may be, Subscriber will have or receive good title to the Private Placement Units, Private Shares and Private Warrants, free and
clear of all liens, claims and encumbrances of any kind, other than (i) transfer restrictions hereunder and (ii) transfer restrictions
under federal and state securities laws.
3.3
Organization and Qualification. The Company is a corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has the requisite corporate power to own its properties and assets and to carry on its business
as now being conducted.
3.4
Authorization; Enforcement. (i) The Company has the requisite corporate power and authority to enter into and perform its obligations
under this Agreement and to issue the Securities in accordance with the terms hereof, (ii) the execution, delivery and performance
of this Agreement by the Company and the consummation by it of the transactions contemplated hereby have been duly authorized by
all necessary corporate action, and no further consent or authorization of the Company or its Board of Directors or stockholders
is required, and (iii) this Agreement constitutes valid and binding obligations of the Company enforceable against the Company
in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, fraudulent conveyance,
moratorium, reorganization, or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and
remedies or by equitable principles of general application and except as enforcement of rights to indemnity and contribution may
be limited by federal and state securities laws or principles of public policy.
3.5
No Conflicts. The execution, delivery and performance of this Agreement and the consummation by the Company of the transactions
contemplated hereby do not (i) result in a violation of the Company’s certificate of incorporation or by-laws, (ii) conflict
with, or constitute a default under any agreement or instrument to which the Company is a party or (iii) any law statute, rule
or regulation to which the Company is subject or any agreement, order, judgment or decree to which the Company is subject. Other
than any SEC or state securities filings which may be required to be made by the Company subsequent to the Closing Date, and any
registration statement which may be filed pursuant thereto, the Company is not required under federal, state or local law, rule
or regulation to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental
agency or self-regulatory entity in order for it to perform any of its obligations under this Agreement or issue the Private Placement
Units, Private Shares, Private Warrants or Warrant Shares in accordance with the terms hereof.
3.6
Additional Representations and Warranties. The representations and warranties of the Company set forth in the Underwriting Agreement
are hereby incorporated herein and are true and correct with the same force and effect as though expressly made herein as of the
date hereof.
3.7
Regulation D Qualification. Neither the Company nor, to its knowledge, any of its affiliates, members, officers, directors or beneficial
shareholders of 20% or more of its outstanding securities, has experienced a disqualifying event as enumerated pursuant to Rule
506(d) of Regulation D under the Securities Act.
4.1
Legend. The Company will issue the Private Placement Units and Private Shares and, when issued, the Warrant Shares, purchased by
the Subscriber in the name of the Subscriber, and such securities will bear the following legend:
“THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR SUCH LAWS OR AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT AND SUCH LAWS WHICH, IN THE OPINION OF COUNSEL FOR THIS COMPANY, IS AVAILABLE.”
“THE
SECURITIES REPRESENTED hereby ARE SUBJECT TO LOCKUP PURSUANT TO A letter agreement by and among 890 5th Avenue Partners, Inc.,
PA 2 Co-Investment LLC, Craig-Hallum Capital Group LLC AND THE OTHER PARTIES THERETO, AND
MAY ONLY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED DURING THE TERM OF THE LOCKUP PURSUANT TO THE TERMS SET FORTH
IN such letter AGREEMENT.”
“SECURITIES
EVIDENCED HEREBY SHALL BE ENTITLED TO REGISTRATION RIGHTS UNDER A REGISTRATION RIGHTS AGREEMENT WITH THE COMPANY.”
4.2
Subscriber’s Compliance. Nothing in this Section 4 shall affect in any way the Subscriber’s obligations and agreements
to comply with all applicable securities laws upon resale of the Securities.
4.3
Company’s Refusal to Register Transfer of the Securities. The Company shall refuse to register any transfer of the Securities,
if in the sole judgment of the Company such purported transfer would not be made (i) pursuant to an effective registration statement
filed under the Securities Act, or pursuant to an available exemption from the registration requirements of the Securities Act
and (ii) in compliance herewith.
4.4
Registration Rights. The Subscriber will be entitled to certain registration rights which will be governed by a registration rights
agreement (“Registration Rights Agreement”) to be entered into among the Subscriber, the Company and others,
on or prior to the effective date of the Registration Statement.
| |
5. |
Waiver of Liquidation Distributions. |
In connection with
the Securities purchased pursuant to this Agreement, Subscriber hereby waives any and all right, title, interest or claim of any
kind in or to any distributions of the amounts in the Trust Account with respect to the Securities, whether (i) in connection with
the exercise of redemption rights if the Company consummates the Business Combination, (ii) in connection with any tender offer
conducted by the Company prior to a Business Combination, (iii) upon the Company’s redemption of shares of Common Stock sold
in the Company’s IPO upon the Company’s failure to timely complete the Business Combination or (iv) in connection with
a stockholder vote to approve an amendment to the Company’s amended and restated certificate of incorporation, (A) to modify
the substance or timing of the Company’s obligation to redeem 100% of the shares of Common Stock sold in the IPO if the Company
does complete the Business Combination within 24 months of the closing of the IPO or (B) with respect to any other provision relating
to stockholders’ rights or pre-Business Combination activity. In the event Subscriber purchases shares of Common Stock in
the IPO or in the aftermarket, any additional shares so purchased shall be eligible to receive the redemption value of such shares
of Common Stock upon the same terms offered to all other purchasers of Common Stock in the IPO in the event the Company fails to
consummate the Business Combination within the time period set forth in the Company’s certificate of incorporation, as amended
from time to time.
| |
6. |
Terms of Private Warrants. Each Private Warrant shall have the terms set forth in the Warrant Agreement. |
| |
7. |
FINRA Considerations. Subscriber acknowledges and agrees that the Private Placement Units and their component parts and the related registration rights will be deemed compensation by the Financial Industry Regulatory Authority (“FINRA”) and will therefore, pursuant to FINRA Rule 5110(e), be subject to lock-up for a period of 180 days immediately following the date of effectiveness or commencement of sales in the IPO, subject to FINRA Rule 5110(e)(2). Additionally, the Private Placement Units and their component parts and the related registration rights may not be sold, transferred, assigned, pledged or hypothecated during the foregoing 180 day period following the effective date of the Registration Statement except to any underwriter or selected dealer participating in the IPO and the bona fide officers or partners of any Subscriber and any such participating underwriter or selected dealer. Additionally, the Private Placement Units and their component parts and the related registration rights will not be the subject of any hedging, short sale, derivative, put or call transaction that would result in the economic disposition of such securities by any person for a period of 180 days immediately following the date of effectiveness or commencement of sales in the IPO. |
| |
8. |
Terms of the Private Placement Units and Private Warrants. |
8.1
The Private Placement Units and their component parts are substantially identical to the units to be offered in the IPO except
that: (i) the Private Placement Units and component parts will not, except in limited circumstances, be transferable or salable
until 30 days after the completion of the Company’s Business Combination, (ii) the Private Warrants will be non-redeemable
and may be exercisable on a “cashless” basis if held by Subscriber or its permitted transferees, as further described
in the Warrant Agreement, (iii) the Private Warrants may not be exercised after the five year anniversary of the effective date
of the Registration Statement pursuant to FINRA Rule 5110(g)(8) and (iv) the Private Placement Units and component parts are being
purchased pursuant to an exemption from the registration requirements of the Securities Act and will become freely tradable only
after the expiration of the lockup described above in clause (i) and they are registered pursuant to the Registration Rights Agreement
or an exemption from registration under the Securities Act is available.
8.2
Subscriber agrees to vote the Private Shares in accordance with the terms of the Insider Letter and as otherwise described in the
Registration Statement.
| |
9. |
Governing Law; Jurisdiction; Waiver of Jury Trial. |
This Agreement shall
be governed by and construed in accordance with the laws of the State of Delaware for agreements made and to be wholly performed
within such state. The parties hereto hereby waive any right to a jury trial in connection with any litigation pursuant to this
Agreement and the transactions contemplated hereby.
| |
10. |
Assignment; Entire Agreement; Amendment. |
10.1
Assignment. Neither this Agreement nor any rights hereunder may be assigned by any party to any other person other than by Subscriber
to a person agreeing to be bound by the terms hereof.
10.2
Entire Agreement. This Agreement sets forth the entire agreement and understanding between the parties as to the subject matter
thereof and merges and supersedes all prior discussions, agreements and understandings of any and every nature among them.
10.3
Amendment. Except as expressly provided in this Agreement, neither this Agreement nor any term hereof may be amended, waived, discharged
or terminated other than by a written instrument signed by all of the parties hereto.
10.4
Binding upon Successors. This Agreement shall be binding upon and inure to the benefit of the parties hereto and to their respective
heirs, legal representatives, successors and permitted assigns.
Unless otherwise provided
herein, any notice or other communication to a party hereunder shall be sufficiently given if in writing and personally delivered
or sent by facsimile or other electronic transmission with copy sent in another manner herein provided or sent by courier (which
for all purposes of this Agreement shall include Federal Express or other recognized overnight courier) or mailed to said party
by certified mail, return receipt requested, at its address provided for herein or such other address as either may designate for
itself in such notice to the other. Communications shall be deemed to have been received when delivered personally, on the scheduled
arrival date when sent by next day or 2nd-day courier service, or if sent by facsimile upon receipt of confirmation of transmittal
or, if sent by mail, then three days after deposit in the mail. If given by electronic transmission, such notice shall be deemed
to be delivered (i) if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to
receive notice; (ii) if by a posting on an electronic network together with separate notice to the stockholder of such specific
posting, upon the later of (1) such posting and (2) the giving of such separate notice; and (iii) if by any other form of electronic
transmission, when directed to the stockholder.
| |
12. |
Counterparts; Electronic Signatures. |
This Agreement may
be executed in counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together
shall constitute one and the same instrument. The words “execution,” “signed,” “signature,”
and words of like import in this Agreement or in any other certificate, agreement or document related to this Agreement shall include
images of manually executed signatures transmitted by facsimile or other electronic format (including, without limitation, “pdf,”
“tif” or “jpg”) and other electronic signatures (including, without limitation, DocuSign and AdobeSign). The
use of electronic signatures and electronic records (including, without limitation, any contract or other record created, generated,
sent, communicated, received, or stored by electronic means) shall be of the same legal effect, validity and enforceability as
a manually executed signature or use of a paper-based record-keeping system to the fullest extent permitted by applicable law.
| |
13. |
Survival; Severability. |
13.1
Survival. The representations, warranties, covenants and agreements of the parties hereto shall survive each Closing Date.
13.2
Severability. In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to
be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision; provided that
no such severability shall be effective if it materially changes the economic benefit of this Agreement to any party.
The titles and subtitles
used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.
[The remainder of this page has been
intentionally left blank.]
IN WITNESS WHEREOF,
the parties hereto have executed this Agreement to be effective as of the date first set forth above.
| |
COMPANY: |
| |
|
| |
|
| |
890 5th Avenue Partners, Inc. |
| |
|
| |
|
| |
By: |
|
| |
|
Name: Adam Rothstein |
| |
|
Title: Executive Chairman |
| |
|
|
| |
|
|
| |
SUBSCRIBER: |
| |
|
| |
|
| |
[●] |
| |
|
| |
|
| |
By: |
|
| |
|
Name: |
| |
|
Title: |
[Signature Page
to Private Placement Unit Purchase Agreement]
Exhibit 10.10
PRIVATE PLACEMENT UNIT PURCHASE AGREEMENT
This PRIVATE PLACEMENT
UNIT PURCHASE AGREEMENT (this “Agreement”) is made as of the [●] day of [●], 2021, by and between
890 5th Avenue Partners, Inc., a Delaware corporation (the “Company”), and 200 Park Avenue Partners, LLC, a
Delaware limited liability company (the “Subscriber”).
WHEREAS, the Company
desires to sell to the Subscriber on a private placement basis (the “Sale”) an aggregate of 594,076 private
placement units (and up to 657,500 units in the aggregate if the underwriters in the IPO exercise their over-allotment option in
full) (“Private Placement Units”) of the Company for a purchase price of $10.00 per Private Placement Unit,
each Private Placement Unit comprised of one share of Class A common stock of the Company, par value $0.0001 per share (“Common
Stock”), and one-third of one redeemable warrant, each whole warrant exercisable to purchase one share of Common Stock
(each whole warrant, a “Warrant”). The shares of Common Stock underlying the Private Warrants (as defined below)
are hereinafter referred to as the “Warrant Shares.” The shares of Common Stock underlying the Private Placement
Units (excluding the Warrant Shares) are hereinafter referred to as the “Private Shares.” The Warrants underlying
the Private Placement Units are hereinafter referred to as the “Private Warrants.” The Private Placement Units,
the Private Shares, the Private Warrants and the Warrant Shares, collectively, are hereinafter referred to as the “Securities.”
Each whole Private Warrant is exercisable to purchase one share of Common Stock at an exercise price of $11.50, subject to the
adjustments as set forth in the Warrant Agreement (as defined below), during the period commencing on the later of (i) twelve (12)
months from the date of the closing of the Company’s initial public offering of units (the “IPO”) and
(ii) 30 days following the consummation of the Company’s initial business combination (the “Business Combination”),
as such term is defined in the registration statement in connection with the IPO, as amended at the time it becomes effective (the
“Registration Statement”), filed with the Securities and Exchange Commission (“SEC”), and
expiring on the fifth anniversary of the consummation of the Business Combination (provided that so long as the Private Warrants
are held by the Subscriber, its designees or affiliates, the Subscriber, its designees or affiliates will not be permitted to exercise
such Private Warrants after the five year anniversary of the effective date of the Registration Statement); and
WHEREAS, the Subscriber
wishes to purchase an aggregate of 594,076 (and up to 657,500 units in the aggregate if the underwriters in the IPO exercise their
over-allotment option in full) Private Placement Units for the Purchase Price (as defined below), and the Company wishes to accept
such subscription from the Subscriber.
NOW, THEREFORE, in
consideration of the premises and the mutual covenants hereinafter set forth and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Company and the Subscriber hereby agree as follows:
| |
1. |
Agreement to Subscribe. |
1.1
Purchase and Issuance of the Private Placement Units.
(a)
Upon the terms and subject to the conditions of this Agreement, the Subscriber hereby agrees to purchase from the Company, and
the Company hereby agrees to sell to the Subscriber, on the Initial Closing Date (as defined below) 594,076 Private Placement Units
in consideration of the payment of the Purchase Price. On the Initial Closing Date, the Company shall, at its option, deliver to
the Subscriber the certificates representing the Securities purchased or effect such delivery in book-entry form.
(a) On
the date of the consummation of the closing of the over-allotment option, if any, in connection with the IPO or on such earlier
time and date as may be mutually agreed by the Subscriber and the Company (an “Over-allotment Closing Date,”
and each Over-allotment Closing Date (if any) and the Initial Closing Date, a “Closing Date”), the Company shall
issue and sell to the Subscriber, and the Subscriber shall purchase from the Company, up to 63,424 additional Private Placement
Units (or, to the extent the over-allotment option is not exercised in full, a lesser number of Private Placement Units in proportion
to the amount of the over-allotment option that is then exercised) at a price of $10.00 per Private Placement Unit for an aggregate
purchase price of up to $634,240 (if the over-allotment option is exercised in full) (such amount, the “Over-allotment
Purchase Price”). The Subscriber shall pay the Over-allotment Purchase Price by wire transfer of immediately available
funds or by such other method as may be reasonably acceptable to the Company, to the trust account (the “Trust Account”)
at a financial institution to be chosen by the Company, maintained by Continental Stock Transfer & Trust Company, acting as
trustee (“Continental”), on or prior to the Over-allotment Closing Date. On the Over-allotment Closing Date,
upon the payment by the Subscriber of the Over-allotment Purchase Price, the Company shall, at its option, deliver a certificate
evidencing the Private Placement Units purchased by the Subscriber on such date duly registered in the Subscriber’s name
to the Subscriber, or effect such delivery in book-entry form.
1.2
Purchase Price. As payment in full for the Private Placement Units being purchased under this Agreement at the Initial Closing
(as defined below), the Subscriber shall pay $5,940,760 (the “Purchase Price”) by wire transfer of immediately
available funds or by such other method as may be reasonably acceptable to the Company, to the Trust Account at a financial institution
to be chosen by the Company, maintained by Continental, on or prior to the Initial Closing Date.
1.3
Closing. The closing of the purchase and sale of the Private Placement Units (the “Initial Closing Date” and
the Initial Closing and each other closing, a “Closing”) shall take place on the date of the closing of the
IPO. Each Closing shall take place at the offices of the Company, or remotely via electronic exchange or at such other place or
method as may be agreed upon by the parties hereto.
1.4
Conditions to Closing.
| (a) | Conditions of the Subscriber’s Obligations. The obligation of the Subscriber
to purchase and pay for the Private Placement Units is subject to the fulfillment, on or before each Closing Date, of each of the
following conditions. |
| a. | The representations and warranties of the Company contained in Section 3 shall be true and
correct at and as of such Closing Date as though then made. |
| b. | The Company shall have performed and complied with all agreements, obligations and conditions contained
in this Agreement that are required to be performed or complied with by it on or before such Closing Date. |
| c. | No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have
been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory
organization having authority over the matters contemplated hereby, which prohibits the consummation of any of the transactions
contemplated by this Agreement or the Warrant Agreement. |
| d. | The Company shall have entered into the Warrant Agreement and the Registration Rights Agreement
(as defined below), in each case on terms satisfactory to the Subscriber. |
| (b) | Conditions of the Company’s Obligations. The obligations of the Company to the Subscriber
under this Agreement are subject to the fulfillment, on or before each Closing Date, of each of the following conditions. |
| a. | The representations and warranties of the Subscriber contained in Section 2 shall be true
and correct at and as of such Closing Date as though then made. |
| b. | The Subscriber shall have performed and complied with all agreements, obligations and conditions
contained in this Agreement that are required to be performed or complied with by the Subscriber on or before such Closing Date. |
| c. | The Company shall have obtained the consent of its Board of Directors authorizing the execution,
delivery and performance of this Agreement, the Registration Rights Agreement and the Warrant Agreement and the issuance and sale
of the Private Placement Units hereunder. |
| d. | No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have
been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory
organization having authority over the matters contemplated hereby, which prohibits the consummation of any of the transactions
contemplated by this Agreement or the Warrant Agreement. |
1.5
Termination. This Agreement and each of the obligations of the undersigned shall be null and void and without effect if the Closing
does not occur on prior to June 30, 2021 or if that certain Underwriting Agreement, dated as of the date hereof, by and among the
Company, Cowen and Company, LLC and Craig-Hallum Capital Group LLC regarding the IPO (the “Underwriting Agreement”),
is terminated for any reason.
| |
2. |
Representations and Warranties of the Subscriber. |
Subscriber represents
and warrants to the Company that:
2.1
No Government Recommendation or Approval. Subscriber understands that no federal or state agency has passed upon or made any recommendation
or endorsement of the Company or the Sale of the Securities.
2.2
Accredited Investor. Subscriber represents that it is an “accredited investor” as such term is defined in Rule 501(a)
of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”), and acknowledges that the
Sale is being made in reliance, among other things, on a private placement exemption to “accredited investors” under
the Securities Act and similar exemptions under state law.
2.3
Intent. Subscriber is purchasing the Securities solely for investment purposes, for Subscriber’s own account (and/or for
the account or benefit of its members or affiliates, as permitted, pursuant to the terms of an agreement (the “Insider
Letter”) to be entered into with respect to the Securities between, among others, Subscriber and the Company, as described
in the Registration Statement), and not with a view to the distribution thereof and Subscriber has no present arrangement to sell
the Securities to or through any person or entity except as may be permitted hereunder. The Subscriber shall not engage in hedging
transactions with regard to the Securities unless in compliance with the Securities Act.
2.4
Restrictions on Transfer. Subscriber acknowledges and understands the Private Placement Units are being offered in a transaction
not involving a public offering in the United States within the meaning of the Securities Act. The Securities have not been registered
under the Securities Act and, if in the future Subscriber decides to offer, resell, pledge or otherwise transfer the Securities,
such Securities may be offered, resold, pledged or otherwise transferred only pursuant to (i) an effective registration statement
filed under the Securities Act, (ii) an exemption from registration under Rule 144 promulgated under the Securities Act, if available,
or (iii) any other available exemption from the registration requirements of the Securities Act, and in each case in accordance
with any applicable securities laws of any state or any other jurisdiction. Notwithstanding the foregoing, Subscriber acknowledges
and understands the Securities are subject to transfer restrictions as described herein and in the Insider Letter. Subscriber agrees
that if any transfer of its Securities or any interest therein is proposed to be made, as a condition precedent to any such transfer,
Subscriber may be required to deliver to the Company an opinion of counsel satisfactory to the Company with respect to such transfer.
Absent registration or another available exemption from registration, Subscriber agrees it will not resell the Securities (unless
otherwise permitted pursuant to the terms hereof). Subscriber further acknowledges that because the Company is a shell company,
Rule 144 may not be available to Subscriber for the resale of the Securities until the one year anniversary following consummation
of the Business Combination of the Company, despite technical compliance with the requirements of Rule 144 and the release or waiver
of any contractual transfer restrictions.
2.5
Sophisticated Investor.
(a)
Subscriber is sophisticated in financial matters and is able to evaluate the risks and benefits of the investment in the Securities.
(b)
Subscriber is aware that an investment in the Securities is highly speculative and subject to substantial risks because, among
other things, the Securities are subject to transfer restrictions and have not been registered under the Securities Act and therefore
cannot be sold unless subsequently registered under the Securities Act or an exemption from such registration is available. Subscriber
is able to bear the economic risk of its investment in the Securities for an indefinite period of time.
2.6
Organization and Authority. Subscriber is duly organized, validly existing and in good standing under the laws of its state of
incorporation or formation and it possesses all requisite power and authority necessary to carry out the transactions contemplated
by this Agreement.
2.7
Authority. This Agreement has been validly authorized, executed and delivered by Subscriber and is a valid and binding agreement
enforceable in accordance with its terms, subject to the general principles of equity and to bankruptcy or other laws affecting
the enforcement of creditors’ rights generally.
2.8
No Conflicts. The execution, delivery and performance of this Agreement and the consummation by Subscriber of the transactions
contemplated hereby do not violate, conflict with or constitute a default under (i) Subscriber’s charter documents, (ii)
any agreement or instrument to which Subscriber is a party or (iii) any law, statute, rule or regulation to which Subscriber is
subject, or any agreement, order, judgment or decree to which Subscriber is subject.
2.9
No Legal Advice from Company. Subscriber acknowledges it has had the opportunity to review this Agreement and the transactions
contemplated by this Agreement and the other agreements entered into between the parties hereto with Subscriber’s own legal
counsel and investment and tax advisors. Except for any statements or representations of the Company made in this Agreement and
the other agreements entered into between the parties hereto, Subscriber is relying solely on such counsel and advisors and not
on any statements or representations of the Company or any of its representatives or agents for legal, tax or investment advice
with respect to this investment, the transactions contemplated by this Agreement or the securities laws of any jurisdiction.
2.10
Reliance on Representations and Warranties. The Subscriber understands the Private Placement Units are being offered and sold to
the Subscriber in reliance on exemptions from the registration requirements under the Securities Act, and analogous provisions
in the laws and regulations of various states, and that the Company is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understandings of the Subscriber set forth in this Agreement in order to determine
the applicability of such provisions.
2.11
No General Solicitation. Subscriber is not subscribing for the Private Placement Units as a result of or subsequent to any general
solicitation or general advertising, including but not limited to any advertisement, article, notice or other communication published
in any newspaper, magazine, or similar media or broadcast over television or radio, or presented at any seminar or meeting or in
the Registration Statement.
2.12
Legend. Subscriber acknowledges and agrees that each of the Private Placement Units and the shares of Common Stock included in
the Private Placement Units shall bear a restrictive legend substantially in the form set forth in Section 4.1 below, the Private
Warrants shall bear the legend substantially in the form set forth in the Warrant Agreement, and that the Securities will be subject
to appropriate “stop transfer restrictions.”
| |
3. |
Representations, Warranties and Covenants of the Company. |
The Company represents
and warrants to, and agrees with, Subscriber that:
3.1
Valid Issuance of Capital Stock. The total number of shares of all classes of capital stock which the Company has authority to
issue is 500,000,000 shares of Class A Common Stock, 25,000,000 shares of Class F Common Stock, $0.0001 par value per share (the
“Class F Common Stock”), and 5,000,000 shares of preferred stock, $0.0001 par value per share (“Preferred
Stock”). As of the date hereof, the Company has issued and outstanding 7,187,500 shares of Class F Common Stock
(of which up to 937,500 shares are subject to forfeiture as described in the Registration Statement), no shares of Class A Common
Stock and no shares of Preferred Stock. All of the issued shares of capital stock of the Company have been duly authorized, validly
issued, and are fully paid and non-assessable.
3.2
Title to Securities. Upon issuance in accordance with, and payment pursuant to, the terms hereof and that certain warrant agreement
(the “Warrant Agreement”) to be entered into between the Company and Continental, as warrant agent, as the case
may be, each of the Private Placement Units, Private Shares, Private Warrants and Warrant Shares will be duly and validly issued,
fully paid and non-assessable. On the date of issuance of the Private Placement Units and Warrant Shares shall have been reserved
for issuance. Upon issuance in accordance with, and payment pursuant to, the terms hereof and the Warrant Agreement, as the case
may be, Subscriber will have or receive good title to the Private Placement Units, Private Shares and Private Warrants, free and
clear of all liens, claims and encumbrances of any kind, other than (i) transfer restrictions hereunder and (ii) transfer restrictions
under federal and state securities laws.
3.3
Organization and Qualification. The Company is a corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has the requisite corporate power to own its properties and assets and to carry on its business
as now being conducted.
3.4
Authorization; Enforcement. (i) The Company has the requisite corporate power and authority to enter into and perform its obligations
under this Agreement and to issue the Securities in accordance with the terms hereof, (ii) the execution, delivery and performance
of this Agreement by the Company and the consummation by it of the transactions contemplated hereby have been duly authorized by
all necessary corporate action, and no further consent or authorization of the Company or its Board of Directors or stockholders
is required, and (iii) this Agreement constitutes valid and binding obligations of the Company enforceable against the Company
in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, fraudulent conveyance,
moratorium, reorganization, or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and
remedies or by equitable principles of general application and except as enforcement of rights to indemnity and contribution may
be limited by federal and state securities laws or principles of public policy.
3.5
No Conflicts. The execution, delivery and performance of this Agreement and the consummation by the Company of the transactions
contemplated hereby do not (i) result in a violation of the Company’s certificate of incorporation or by-laws, (ii) conflict
with, or constitute a default under any agreement or instrument to which the Company is a party or (iii) any law statute, rule
or regulation to which the Company is subject or any agreement, order, judgment or decree to which the Company is subject. Other
than any SEC or state securities filings which may be required to be made by the Company subsequent to the Closing Date, and any
registration statement which may be filed pursuant thereto, the Company is not required under federal, state or local law, rule
or regulation to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental
agency or self-regulatory entity in order for it to perform any of its obligations under this Agreement or issue the Private Placement
Units, Private Shares, Private Warrants or Warrant Shares in accordance with the terms hereof.
3.6
Additional Representations and Warranties. The representations and warranties of the Company set forth in the Underwriting Agreement
are hereby incorporated herein and are true and correct with the same force and effect as though expressly made herein as of the
date hereof.
3.7
Regulation D Qualification. Neither the Company nor, to its knowledge, any of its affiliates, members, officers, directors or beneficial
shareholders of 20% or more of its outstanding securities, has experienced a disqualifying event as enumerated pursuant to Rule
506(d) of Regulation D under the Securities Act.
4.1
Legend. The Company will issue the Private Placement Units and Private Shares and, when issued, the Warrant Shares, purchased by
the Subscriber in the name of the Subscriber, and such securities will bear the following legend:
“THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR SUCH LAWS OR AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT AND SUCH LAWS WHICH, IN THE OPINION OF COUNSEL FOR THIS COMPANY, IS AVAILABLE.”
“THE
SECURITIES REPRESENTED hereby ARE SUBJECT TO LOCKUP PURSUANT TO A letter agreement by and among 890 5th Avenue Partners, Inc.,
PA 2 Co-Investment LLC, Craig-Hallum Capital Group LLC AND THE OTHER PARTIES THERETO, AND
MAY ONLY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED DURING THE TERM OF THE LOCKUP PURSUANT TO THE TERMS SET FORTH
IN such letter AGREEMENT.”
“SECURITIES
EVIDENCED HEREBY SHALL BE ENTITLED TO REGISTRATION RIGHTS UNDER A REGISTRATION RIGHTS AGREEMENT WITH THE COMPANY.”
4.2
Subscriber’s Compliance. Nothing in this Section 4 shall affect in any way the Subscriber’s obligations and agreements
to comply with all applicable securities laws upon resale of the Securities.
4.3
Company’s Refusal to Register Transfer of the Securities. The Company shall refuse to register any transfer of the Securities,
if in the sole judgment of the Company such purported transfer would not be made (i) pursuant to an effective registration statement
filed under the Securities Act, or pursuant to an available exemption from the registration requirements of the Securities Act
and (ii) in compliance herewith.
4.4
Registration Rights. The Subscriber will be entitled to certain registration rights which will be governed by a registration rights
agreement (“Registration Rights Agreement”) to be entered into among the Subscriber, the Company and others,
on or prior to the effective date of the Registration Statement.
| |
5. |
Waiver of Liquidation Distributions. |
In connection with
the Securities purchased pursuant to this Agreement, Subscriber hereby waives any and all right, title, interest or claim of any
kind in or to any distributions of the amounts in the Trust Account with respect to the Securities, whether (i) in connection with
the exercise of redemption rights if the Company consummates the Business Combination, (ii) in connection with any tender offer
conducted by the Company prior to a Business Combination, (iii) upon the Company’s redemption of shares of Common Stock sold
in the Company’s IPO upon the Company’s failure to timely complete the Business Combination or (iv) in connection with
a stockholder vote to approve an amendment to the Company’s amended and restated certificate of incorporation, (A) to modify
the substance or timing of the Company’s obligation to redeem 100% of the shares of Common Stock sold in the IPO if the Company
does complete the Business Combination within 24 months of the closing of the IPO or (B) with respect to any other provision relating
to stockholders’ rights or pre-Business Combination activity. In the event Subscriber purchases shares of Common Stock in
the IPO or in the aftermarket, any additional shares so purchased shall be eligible to receive the redemption value of such shares
of Common Stock upon the same terms offered to all other purchasers of Common Stock in the IPO in the event the Company fails to
consummate the Business Combination within the time period set forth in the Company’s certificate of incorporation, as amended
from time to time.
| |
6. |
Terms of Private Warrants. Each Private Warrant shall have the terms set forth in the Warrant Agreement. |
| |
7. |
Terms of the Private Placement Units and Private Warrants. |
7.1
The Private Placement Units and their component parts are substantially identical to the units to be offered in the IPO except
that: (i) the Private Placement Units and component parts will not, except in limited circumstances, be transferable or salable
until 30 days after the completion of the Company’s Business Combination, (ii) the Private Warrants will be non-redeemable
and may be exercisable on a “cashless” basis if held by Subscriber or its permitted transferees, as further described
in the Warrant Agreement, (iii) the Private Warrants may not be exercised after the five year anniversary of the effective date
of the Registration Statement and (iv) the Private Placement Units and component parts are being purchased pursuant to an exemption
from the registration requirements of the Securities Act and will become freely tradable only after the expiration of the lockup
described above in clause (i) and they are registered pursuant to the Registration Rights Agreement or an exemption from registration
under the Securities Act is available.
7.2
Subscriber agrees to vote the Private Shares in accordance with the terms of the Insider Letter and as otherwise described in the
Registration Statement.
| |
8. |
Governing Law; Jurisdiction; Waiver of Jury Trial. |
This Agreement shall
be governed by and construed in accordance with the laws of the State of Delaware for agreements made and to be wholly performed
within such state. The parties hereto hereby waive any right to a jury trial in connection with any litigation pursuant to this
Agreement and the transactions contemplated hereby.
| |
9. |
Assignment; Entire Agreement; Amendment. |
9.1
Assignment. Neither this Agreement nor any rights hereunder may be assigned by any party to any other person other than by Subscriber
to a person agreeing to be bound by the terms hereof.
9.2
Entire Agreement. This Agreement sets forth the entire agreement and understanding between the parties as to the subject matter
thereof and merges and supersedes all prior discussions, agreements and understandings of any and every nature among them.
9.3
Amendment. Except as expressly provided in this Agreement, neither this Agreement nor any term hereof may be amended, waived, discharged
or terminated other than by a written instrument signed by all of the parties hereto.
9.4
Binding upon Successors. This Agreement shall be binding upon and inure to the benefit of the parties hereto and to their respective
heirs, legal representatives, successors and permitted assigns.
Unless otherwise provided
herein, any notice or other communication to a party hereunder shall be sufficiently given if in writing and personally delivered
or sent by facsimile or other electronic transmission with copy sent in another manner herein provided or sent by courier (which
for all purposes of this Agreement shall include Federal Express or other recognized overnight courier) or mailed to said party
by certified mail, return receipt requested, at its address provided for herein or such other address as either may designate for
itself in such notice to the other. Communications shall be deemed to have been received when delivered personally, on the scheduled
arrival date when sent by next day or 2nd-day courier service, or if sent by facsimile upon receipt of confirmation of transmittal
or, if sent by mail, then three days after deposit in the mail. If given by electronic transmission, such notice shall be deemed
to be delivered (i) if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to
receive notice; (ii) if by a posting on an electronic network together with separate notice to the stockholder of such specific
posting, upon the later of (1) such posting and (2) the giving of such separate notice; and (iii) if by any other form of electronic
transmission, when directed to the stockholder.
| |
11. |
Counterparts; Electronic Signatures. |
This Agreement may
be executed in counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together
shall constitute one and the same instrument. The words “execution,” “signed,” “signature,”
and words of like import in this Agreement or in any other certificate, agreement or document related to this Agreement shall include
images of manually executed signatures transmitted by facsimile or other electronic format (including, without limitation, “pdf,”
“tif” or “jpg”) and other electronic signatures (including, without limitation, DocuSign and AdobeSign). The
use of electronic signatures and electronic records (including, without limitation, any contract or other record created, generated,
sent, communicated, received, or stored by electronic means) shall be of the same legal effect, validity and enforceability as
a manually executed signature or use of a paper-based record-keeping system to the fullest extent permitted by applicable law.
| |
12. |
Survival; Severability. |
12.1
Survival. The representations, warranties, covenants and agreements of the parties hereto shall survive each Closing Date.
12.2
Severability. In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to
be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision; provided that
no such severability shall be effective if it materially changes the economic benefit of this Agreement to any party.
The titles and subtitles
used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.
[The remainder of this page has been
intentionally left blank.]
IN WITNESS WHEREOF,
the parties hereto have executed this Agreement to be effective as of the date first set forth above.
| |
COMPANY: |
| |
|
| |
890 5th Avenue Partners, Inc. |
| |
|
| |
|
| |
By: |
|
| |
|
Name: Adam Rothstein |
| |
|
Title: Executive Chairman |
| |
|
|
| |
SUBSCRIBER: |
| |
|
| |
200 Park Avenue Partners, LLC |
| |
|
| |
By: |
|
| |
|
Name: Adam Rothstein |
| |
|
Title: Manager |
[Signature
Page to Private Placement Unit Purchase Agreement]
Exhibit 23.1
Independent
Registered Public Accounting Firm’s Consent
We consent to the inclusion in this
Registration Statement of 890 5th Avenue Partners, Inc. (the “Company”) on Amendment No. 3 to Form S-1, File No.
333-251650, of our report dated November 3, 2020, which includes an explanatory paragraph as to the Company’s ability
to continue as a going concern, with respect to our audit of the financial statements of 890 5th Avenue Partners, Inc. as of
October 15, 2020 and for the period from September 9, 2020 (inception) through October 15, 2020, which report appears in the
Prospectus, which is part of this Registration Statement. We also consent to the reference to our Firm under the heading
“Experts” in such Prospectus.
/s/ Marcum llp
Marcum llp
New York, NY
January 11, 2021
