As filed with the Securities and Exchange Commission on December 8, 2020
Registration No. 333-249177
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 2
to
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
KINS Technology Group Inc.
(Exact name of registrant as specified in its charter)
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Delaware
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6770
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85-2104918
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(State or other jurisdiction of
incorporation or organization)
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(Primary Standard Industrial
Classification Code Number)
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(I.R.S. Employer
Identification Number)
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Four Palo Alto Square, Suite 200
3000 El Camino Real
Palo Alto, CA 94306
650-575-4456
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Khurram P. Sheikh, Chief Executive Officer
KINS Technology Group Inc.
Four Palo Alto Square, Suite 200
3000 El Camino Real
Palo Alto, CA 94306
650-575-4456
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
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Gregg A. Noel, Esq.
Michael J. Mies, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
525 University Avenue, Suite 1400
Palo Alto, California 94301
(650) 470-4500
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Paul D. Tropp
Rachel D. Phillips
Ropes & Gray LLP
1211 Avenue of the Americas
New York, NY 10036
(212) 596-9000
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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.
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Large accelerated filer ☐
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Accelerated filer ☐
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Non-accelerated filer ☒
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Smaller reporting company ☒
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Emerging growth company ☒
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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 pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
CALCULATION OF REGISTRATION FEE
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Title of each Class of Security being registered
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Amount being
Registered
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Proposed
Maximum
Offering Price
Per Security(1)
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Proposed
Maximum
Aggregate
Offering Price(1)
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Amount of
Registration Fee
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Units, each consisting of one share of Class A common stock, $0.0001 par value, and one-half of one redeemable warrant(2)
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23,000,000 Units
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$ |
10.00 |
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$ |
230,000,000 |
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$ |
29,854.00 |
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Shares of Class A common stock included as part of the Units(3)
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23,000,000 Shares
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— |
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— |
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—(4) |
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Redeemable Warrants included as part of the Units(3)
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11,500,000 Warrants
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— |
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— |
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—(4) |
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Total
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$ |
230,000,000 |
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$ |
29,854.00(5) |
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(1)
Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(a) under the Securities Act of 1933, as amended, or the “Securities Act”.
(2)
Includes 3,000,000 Units, consisting of 3,000,000 shares of Class A common stock and 1,500,000 redeemable warrants underlying such Units, which may be issued on exercise of a 45-day option granted to the underwriters to cover over-allotments, if any.
(3)
Pursuant to Rule 416 under the Securities Act, 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) under the Securities Act.
(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.
SUBJECT TO COMPLETION, DATED DECEMBER 8, 2020
PRELIMINARY PROSPECTUS
KINS Technology Group Inc.
$200,000,000
20,000,000 Units
KINS Technology Group Inc. is a newly organized 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 throughout this prospectus as our initial business combination, with one or more businesses or entities, which we refer to throughout this prospectus as a target business. We have not selected any specific target business and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any target business regarding a business combination with us. We may pursue a target business in any stage of its corporate evolution in any industry, sector or geographic location (subject to certain limitations described in this prospectus).
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-half 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 share, subject to adjustment as described in this prospectus, and only whole warrants are exercisable. No fractional warrants will be issued upon separation of the units and only whole warrants will trade. 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. Subject to the terms and conditions described in this prospectus, we may redeem the warrants once the warrants become exercisable. We have also granted the underwriters a 45-day option to purchase up to an additional 3,000,000 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, calculated 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 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 throughout this prospectus, subject to the limitations described herein. If we have not completed our initial business combination within 18 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 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 as further described herein.
Our sponsor, KINS Capital LLC, and certain funds and accounts managed by BlackRock, Inc., which we refer to collectively as the “direct anchor investors” throughout this prospectus, have committed to purchase an aggregate of 8,000,000 warrants (or 8,900,000 warrants if the underwriters’ over-allotment option is exercised in full) at a price of $1.00 per warrant (approximately $8,000,000 in the aggregate, or $8,900,000 if the underwriters’ over-allotment option is exercised in full) in a private placement that will close simultaneously with the closing of this offering. We refer to these warrants as the private placement warrants throughout this prospectus. Each private placement warrant entitles the holder thereof to purchase one share of our Class A common stock at $11.50 per share, subject to adjustment as provided herein.
The direct anchor investors have expressed to us an interest to purchase units in this offering. For a discussion of certain additional arrangements with our anchor investors, please see “Summary—The Offering—Expressions of Interest.”
Our initial stockholders, which includes our sponsor and direct anchor investors, own an aggregate of 5,750,000 shares of our Class B common stock (up to an aggregate of 750,000 shares of which are subject to forfeiture depending on the extent to which the underwriters’ over-allotment option is exercised). We refer to these shares of Class B common stock as the founder shares throughout this prospectus. The shares of Class B 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 adjustment as described herein. Prior to the completion of our initial business combination, only holders of our Class B common stock will have the right to vote on the election of directors. Holders of our public shares will not be entitled to vote on the election of directors during such time. In addition, prior to the completion of our initial business combination, holders of a majority of the outstanding shares of our Class B common stock may remove a member of the board of directors for any reason. With respect to any other matter submitted to a vote of our stockholders, including any vote in connection with
our initial business combination, holders of the Class A common stock and holders of the Class B common stock will vote together as a single class on all matters submitted to a vote of our stockholders, except as required by law.
Currently, there is no public market for our units, Class A common stock or warrants. We have been approved to list our units on The Nasdaq Capital Market, or Nasdaq, under the symbol “KINZ.U” on or promptly after the date of this prospectus. We expect that our units will be listed on Nasdaq on or promptly after the date of this prospectus. We expect that the Class A common stock and warrants comprising the units will begin separate trading on the 52nd day following the date of this prospectus (or, if such date is not a business day, the following business day) unless UBS Securities LLC, Stifel, Nicolaus & Company Incorporated and BTIG, LLC inform us of their decision to allow earlier separate trading, subject to our filing a Current Report on Form 8-K with the Securities and Exchange Commission, or the SEC, containing an audited balance sheet reflecting our receipt of the gross proceeds of this offering and issuing a press release announcing when such separate trading will begin. Once the securities comprising the units begin separate trading, we expect that the Class A common stock and warrants will be listed on Nasdaq under the symbols “KINZ” and “KINZ WS,” 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 the section of this prospectus entitled “Risk Factors” beginning on page
45 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.
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.
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Per Unit
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Total
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Public offering price
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$ |
10.00 |
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$ |
200,000,000 |
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Underwriting discounts and commissions(1)
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$ |
0.55 |
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$ |
11,000,000(2) |
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Proceeds, before expenses, to KINS Technology Group Inc.
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$ |
9.45 |
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$ |
189,000,000 |
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(1)
Includes $0.35 per unit, or up to $7,000,000 (or up to $8,050,000 if the underwriters’ over-allotment option is exercised in full) in the aggregate payable to the underwriters for deferred underwriting commissions to be placed in a trust account located in the United States as described herein. The deferred commissions will be released to the underwriters only on completion of an initial business combination, as described in this prospectus. See the section of this prospectus entitled “Underwriting” for a description of compensation and other items of value payable to the underwriters.
(2)
Certain investors identified by our sponsor may purchase units in this offering at the initial public offering price. The underwriters will not receive any underwriting discounts or commissions on the units purchased by such investors.
Of the proceeds we receive from this offering and the sale of the private placement warrants described in this prospectus, $202.0 million, or $232.3 million if the underwriters’ over-allotment option is exercised in full ($10.10 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 $2.0 million will be available to pay fees and expenses in connection with the closing of this offering and for working capital following the closing of this offering. Except with respect to interest earned on the funds held in the trust account that may be released to us to pay our tax obligations, the proceeds from this offering and the sale of the private placement warrants held in the trust account will not be released from the trust account until the earliest to occur of (a) the completion of our initial business combination, (b) the redemption of any public shares properly submitted in connection with a stockholder vote to amend our amended and restated certificate of incorporation (i) to modify the substance or timing of our obligation to allow redemption in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination within 18 months from the closing of this offering or (ii) with respect to any other provisions relating to stockholders’ rights or pre-initial business combination activity and (c) the redemption of our public shares if we have not completed our business combination within 18 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.
The underwriters are offering the units for sale on a firm commitment basis. The underwriters expect to deliver the units to the purchasers on or about , 2020.
Joint Book-Running Managers
UBS Investment Bank
Stifel
BTIG
Co-Lead Manager
JMP Securities
Co-Managers
Maxim Group LLC
Academy Securities
, 2020
We are responsible for the information contained in this prospectus. We have not authorized anyone to provide you with different information, and neither we nor the underwriters take responsibility for any other information others may give to you. We are not, and the underwriters are not, making an offer to sell securities in any jurisdiction where the offer or sale is not permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than the date on the front of this prospectus or the date specified herein.
TABLE OF CONTENTS
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1
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44
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45
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79
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84
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85
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87
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88
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95
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123
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134
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137
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141
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159
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168
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176
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176
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176
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F-1
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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 TM 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 the section of this prospectus entitled “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:
➢
“certificate of incorporation” are to our amended and restated certificate of incorporation to be in effect as of the date of this prospectus;
➢
“common stock” are to our Class A common stock and our Class B common stock, collectively;
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“direct anchor investors,” are to certain funds and accounts managed by BlackRock, Inc.;
➢
“equity-linked securities” are to any securities of our company that are convertible into or exchangeable or exercisable for common stock of our company;
➢
“founder shares” are to shares of our Class B common stock outstanding as of this offering and the shares of our Class A common stock that may be issued upon the conversion thereof as described herein;
➢
“initial stockholders” are to our sponsor and the other holders of our founder shares prior to this offering;
➢
“KINS Technology Group,” “KINS,” “Company,” “our,” “we,” or “us” are to KINS Technology Group Inc.;
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“management” or our “management team” are to our officers and directors;
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“private placement warrants” are to the warrants issued to our sponsor and direct anchor investors 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 initial stockholders and members of our management team to the extent they purchase public shares, provided that each initial stockholder’s and member of our management team’s status as a “public stockholder” shall only exist with respect to such public shares;
➢
“public warrants” are to (1) our redeemable warrants sold as part of the units in this offering (whether they are purchased in this offering or thereafter in the open market) and (2) any private placement warrants or warrants issued upon conversion of working capital loans that are transferred to third parties that are not initial purchasers or permitted transferees following the consummation of our initial business combination;
➢
“Representatives” are to UBS Securities LLC, Stifel, Nicolaus & Company, Incorporated and BTIG, LLC, as representatives of the several underwriters of this offering;
➢
“specified future issuance” are to an issuance of a class of equity or equity-linked securities to certain purchasers, which may include affiliates of our management team, that we may determine to make in connection with financing our initial business combination;
➢
“sponsor” are to KINS Capital LLC, a Delaware limited liability company, in which each of our officers and directors is, directly or indirectly, a member, and of which Khurram P. Sheikh, our Chairman, Chief Executive Officer, and Chief Financial Officer, is the managing member; and
➢
“warrants” are to our redeemable warrants, which includes the public warrants and private placement warrants, as well as any warrants issued upon conversion of working capital loans upon consummation of our initial business combination, collectively.
Each unit consists of one share of Class A common stock and one-half 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 share, subject to adjustment as described in this prospectus, and only whole warrants are exercisable. No fractional warrants will be issued upon separation of the units and only whole warrants will trade. Accordingly, unless you purchase at least two units, you will not be able to receive or trade a whole warrant.
In October 2020, our sponsor forfeited 625,000 founder shares and the direct anchor investors purchased 625,000 founder shares for an aggregate purchase price of approximately $2,717, or approximately $0.004 per share.
Unless we tell you otherwise, the information in this prospectus assumes that the underwriters will not exercise their over-allotment option and the forfeiture by our sponsor of an aggregate of 750,000 founder shares.
Proposed business
Our Company
We are a blank check company whose business purpose is to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. We have not selected any specific target business and we have not, nor has anyone on our behalf, engaged in any substantive discussions, directly or indirectly, with any target business with respect to an initial business combination with us. We may pursue a target business in any industry or geographic region.
Our Mission
KINS Technology Group is focused on identifying and acquiring transformative technology businesses that are shaping the digital future and creating a new paradigm of communications and computing.
The five technology pillars of this new paradigm are next generation connectivity, open software, edge-cloud computing, predictive data analytics, and immersive media technologies.
We believe the world is at an inflection point and these technologies will transform all vertical market segments including IT, industrial, transportation, smart infrastructure, healthcare, education, agriculture, and entertainment.
Our Management (Officers & Directors)
Our leader Mr. Khurram Sheikh has assembled a dynamic management team of industry pioneers, entrepreneurs, operating executives, and market makers who have significant public sector experiences to source the next generation of transformative technologies and applications. We are staunch believers in the power of technology and design-thinking in creating disruptive human experiences, and we are convinced that the new age of technology ushers in transformational change. The team’s diverse skill sets of creative ideation, product innovation, industry development, operational excellence and scale engineering blend together to provide a unique view of how businesses should function in the new age of technology. The diversity of the KINS team parallels the convergence occurring in the marketplace because members of the team have wide-ranging and complementary experience that will provide a solid foundation to evaluate a range of opportunities.
Mr. Khurram Sheikh has served as our Founder, Chairman and Chief Executive Officer since our inception. Mr. Sheikh has been at the forefront of innovation in the technology, mobile, semiconductor, telecom and media industries for the past 25 years with CEO and CTO roles at leading technology companies. Hired as an intern at Sprint’s Advanced Technology Labs in the summer of 1996 from Stanford University, he started a project called “Broadband Wireless” that ultimately led to the world’s first 4G system deployment in 2004. As CTO for Mobile Broadband at Sprint, Mr. Sheikh and his team pioneered the adoption of MIMO and OFDM technologies as the global technology standard for 4G and built the overall ecosystem for 4G from devices to infrastructure assembling a diverse set of global vendor partners. His team was also responsible for the multi-billion dollar acquisition of 200 MHz of nationwide BRS (Broadband Radio Service) spectrum at 2.5GHz. Currently, this spectrum is the cornerstone of the combined T-Mobile-Sprint’s 5G strategy and showcases his vision and foresight. After the Sprint-Nextel merger in 2005, Mr. Sheikh was hired as employee no.1 for wireless at Time Warner Cable (“Time Warner”) as VP, Wireless Strategy and Development. There, he and his team designed the first outdoor cable WiFi hot-spots that are now deployed in the millions across the country. At Time Warner, his team was also responsible for the first cable MVNO as well as the multi-billion dollar acquisition of AWS spectrum on behalf of the cable consortium Spectrum Co. From 2007 to 2013, he was the CTO for Powerwave Technologies (“Powerwave”) where he built the world’s first software defined active antenna and remote radio head technology that has been deployed in millions of installations globally and was subsequently appointed as the CEO of Powerwave in 2013. In 2014,
Mr. Sheikh was appointed as the Chief Strategy and Technology Officer for Silicon Image (SIMG) and the President/CEO of its millimeter wave/5G subsidiary SiBEAM. SiBEAM pioneered millimeter wave RF beamforming technology using CMOS processes, and built the largest patent portfolio in the space as well as high performance semiconductor and software products for consumer, industrial, and communications markets. SIMG was acquired by Lattice Semiconductor (“Lattice”) (Nasdaq:LSCC) for $600 million after which he was appointed the Chief Strategy and Technology Officer of the combined company responsible for corporate strategy, roadmap, M&A and technology development, and his team developed the core new strategy for Lattice’s edge AI applications product portfolio. From 2016 to early 2020, Mr. Sheikh was the CEO of kwikbit, a private company building a “network as a service” solution using gigabit radios, edge compute, virtualization, and artificial intelligence. Currently, he is Founder & CEO of Aijaad, a boutique strategic advisory firm where he advises both large private equity firms as well as boards of public companies on the future of 5G, IoT, Edge Computing and AI technologies and is actively involved in M&A, technology strategy and market development. Mr. Sheikh holds a Bachelor of Science degree in Electrical Engineering with highest honors from the University of Engineering & Technology in Pakistan, as well as a Master of Science degree in Electrical Engineering from Stanford University. He has also completed advanced management courses at the Harvard Business School and the Stanford Graduate School of Business.
Mr. Eric Zimits has served as our Chief Corporate Development Officer since August 2020. Mr. Zimits is also a Strategic Advisor to Netzyn, Inc. (“Netzyn”), a company that has developed a distributed cloud platform that streams native applications and operating systems to any user device. Mr. Zimits has had an extensive career in the financial sector as an analyst and investor and was among the first analysts on Wall Street to identify the wireless and mobile communications opportunity, and later the internet infrastructure sector. Mr. Zimits was active in identifying, analyzing, and supporting initial public offering and follow-on public offering prospects throughout his career. He has worked on public offerings for industry pioneers including Qorvo, Checkpoint Software, F5 Networks, Proxim, and Openwave. Mr. Zimits’ years of experience tracking the communications industry teamed with his financial savvy enables him to guide portfolio companies in making sound business decisions based on a deep understanding of the marketplace. From 1992 to 1996, Mr. Zimits launched research coverage of the wireless industry as a General Partner at Volpe, Welty & Company. Mr. Zimits also held analyst positions at Rauscher Pierce Refsnes and Morgan Keegan & Company. From 1996 to 2000, Mr. Zimits was Managing Director and head of the Communications Research Group at Hambrecht & Quist (“H&Q”), and later ChaseH&Q after the acquisition of H&Q. At H&Q, he initiated and supported numerous venture investments including InterNAP, Sierra Wireless, Amber Networks, and Paragon Software. Following ChaseH&Q, Mr. Zimits served as a Managing Director of Granite Ventures (“Granite”) from 2000 until 2016. At Granite, he focused on investing in early-stage communications, security, and software companies including RF Magic (NYSE: MXL), Speakeasy (acquired by Best Buy), Mojo Networks (acquired by Arista), Percello (acquired by Broadcom), and Localmind (acquired by Airbnb). In addition to his current role at Netzyn, he serves as advisor to early stage companies including Image Algorithmics and Nivasa. He received a Bachelor’s degree from Purdue University in biomedical engineering and an M.B.A. from Tulane University’s A.B. Freeman School of Business.
Mr. Hassan Ahmed has served as a member of our Board of Directors since August 2020. Mr. Ahmed most recently served as the Chairman and CEO of Affirmed Networks (“Affirmed”) which pioneered virtualization technologies for mobile 5G networks. He ran Affirmed from inception, and after nearly a decade of growth, sold the company to Microsoft in March 2020. He was chief technology officer of Cascade Communications which Ascend Communications (“Ascend”) acquired for $3.7 billion. In 1999, Lucent Technologies acquired Ascend for $24 billion where he was General Manager of the Cascade business. He served as CEO and Chairman of Sonus Networks (“Sonus”), growing it from its very early roots to the leading company transforming telephony to IP. Sonus went public in May 2000 and had a peak market value of $15.4 billion. Mr. Ahmed currently serves on the boards of Ciena Corp. (NYSE: CIEN) and Vesper. He has also served on several other public and private boards as well as on the boards of select educational institutions. Mr. Ahmed holds Bachelor and Master’s degrees in Engineering from Carleton University and a Ph.D in Electrical Engineering from Stanford University.
Ms. Di-Ann Eisnor has served as a member of our Board of Directors since August 2020. Ms. Eisnor is an entrepreneur and executive who is currently Co-Founder and CEO of Core, a venture-backed
construction labor marketplace. Ms. Eisnor had a transformative impact and helped scale Waze, Inc. (“Waze”), a crowd-sourced navigation and real-time traffic application, owned by Alphabet, Inc. Ms. Eisnor was with Waze for 10 years, founding its U.S. office in 2009. During her tenure she oversaw user growth from 10,000 to more than 100 million. Her infrastructure and mobility work brought data and tools into 800+ cities to reduce congestion and improve emergency response times. Waze was acquired by Google in 2013 for over $1 billion. At Google, she played a key role in operationalizing the Waze integration. She culminated her work at Waze as the VP Platform and Director of Growth. Prior to joining Waze, Ms. Eisnor was co-founder and Chief Executive Officer of Platial Inc., a collaborative, user-generated cartographic website. Ms. Eisnor currently serves on the board of Saia Inc. (Nasdaq: SAIA) and Gray Area Foundation for the Arts. Most recently, she was an executive of The We Company, a part of the We Work Companies, from February 2019 until her departure in October 2019. She is a venture partner at Obvious Ventures and is co-founder with Lupe Fiasco of Neighborhood Start Fund, a neighborhood-based micro-fund in underserved urban neighborhoods. She holds a Bachelor’s Degree in Studio Art and Business Administration from New York University. She is a 2014 Henry Crown Fellow of the Aspen Institute and a member of the Aspen Global Leadership Network.
Mr. Camillo Martino has served as a member of our Board of Directors since August 2020. Mr. Martino was a senior global semiconductor company executive and now serves as a board member and executive advisor to many global technology companies that are focused on building high growth businesses that emphasize the convergence around wireless, IoT, cloud, edge and AI applications. Prior to his current board roles, Mr. Martino was a chief executive officer and C-suite executive of a number of high technology companies worldwide. He is currently Chairman of the Board of Directors of MagnaChip Semiconductor (NYSE: MX) and has served on this Board since August 2016. Since 2018, he has also served on the Board of Directors at Sensera (ASX: SE1), which is focused on IoT platform solutions. Mr. Martino also serves on the Board of Directors at multiple privately-held companies, including VVDN Technologies (fastest growing ODM based in India with a focus on Wireless, Networking & IoT) and KeraCel (multi-material, multi-method 3D printing). Mr. Martino’s prior board service includes serving on the boards of Cypress Semiconductor from June 2017 through the sale of the company to Infineon in April 2020 for $10 billion and Moschip Technologies (BOM: 532407) from April 2017 to May 2019. As an operating executive, Mr. Martino served as Chief Executive Officer of Silicon Image, Inc. (where he also served as a director) from 2010 until the completion of its sale to Lattice Semiconductor Corporation (Nasdaq: LSCC) in March 2015, Chief Operating Officer of SAI Technology Inc. from January 2008 to December 2009 (where he also served as director from 2006 to 2010), and Chief Executive Officer of Cornice Inc. from 2005 to 2007 (where he also served as a director). From August 2001 to July 2005, Mr. Martino served as the executive vice president and chief operating officer at Zoran Corporation, a global SoC semiconductor company. Prior to that, Mr. Martino held multiple positions with National Semiconductor Corporation for a total of nearly 14 years in four countries. Mr. Martino holds a Bachelor of Applied Science from the University of Melbourne and a Graduate Diploma (in Digital Communications) from Monash University in Australia.
Mr. Atif Rafiq has served as a member of our Board of Directors since August 2020. Before stepping down in December 2020, Mr. Rafiq served as President of Commercial & Growth at MGM Resorts (NYSE: MGM), a Fortune 300 company, where he oversaw a significant portfolio of corporate functions as well as directed the company’s growth strategy. Previously, he was the Chief Digital Officer and Global CIO for Volvo, the Swedish luxury automaker and Global 250 company. He joined Volvo in January 2017 to partner with the CEO on business model and product innovation, and oversee efforts in mobility, connected cars, IoT, e-commerce, retail systems, CRM, big data, AI, and enterprise applications. From 2013 to 2017, Mr. Rafiq formulated and drove one of the largest digital transformations in the world at McDonald’s Corporation (NYSE: MCD) as Senior Vice President and Global Chief Digital Officer. In four years, the company went from ideas to global rollout of initiatives such as mobile ordering, digital delivery, curbside pickup, table service and ordering, digital menu boards, personalized offers, and kiosk based self-service ordering. These initiatives have been rolled out globally as McDonald’s “store of the future,” adding billions of incremental revenue. Mr. Rafiq has been at the center of Internet and digital disruption for over 20 years, building on 15 years of experience in pure play tech companies such as Amazon (Nasdaq: AMZN), Yahoo and AOL where he led large scale, fast growing digital businesses. Mr. Rafiq was also the Founder and CEO of a Silicon Valley start-up, Covigna, which he
led from inception to exit. He holds a Bachelor’s degree in Mathematics-Economics from Wesleyan University and a Master’s degree in Business Administration from the University of Chicago. Mr. Rafiq is a social media influencer, with over 600,000 followers on Twitter and LinkedIn, and has advised and invested in over 30 startups.
Mr. Allen Salmasi has served as a member of our Board of Directors since August 2020. Mr. Salmasi is a pioneer in the wireless industry with over 40 years of experience building leading edge companies. Mr. Salmasi is the CEO of Veea Inc. (“Veea”), a provider of comprehensive full stack solutions for edge computing and communications. He is also the Chairman and CEO of NLabs Inc., a New York based family office investment firm. Mr. Salmasi serves on the boards of several companies engaged in the areas of quantum photonics, distributed hybrid edge-cloud and oncology. Prior to founding Veea in 2014, Mr. Salmasi was the Chairman, CEO and President of NextWave Wireless Inc. (“NextWave”) until its acquisition by AT&T (NYSE: ATT) in 2013. At NextWave, Mr. Salmasi and his team developed and implemented the first Mobile Virtual Network Operator (MVNO) service with MCI Corp. as its first major customer, in 1996. Through 2013, Verizon Wireless, AT&T and other carriers and telecom vendors purchased NextWave assets in separate transactions for multiple billions of dollars. Prior to NextWave, he served as the President of Wireless Division, Chief Strategy Officer and a member of the Board of Directors at Qualcomm, where he initiated and led the development of the cellular products business, including chipset and handset product developments and licensing and standards programs for Code Division Multiple Access (CDMA) technology, and initiated the Globalstar low-earth-orbit mobile satellite communications project. Prior to Qualcomm, Mr. Salmasi was the CEO and President of Omninet Corporation, where he initiated and led the development of OmniTRACS, the world’s first and largest commercial terrestrial mobile satellite communications service for two-way messaging and position reporting services that embodied the first commercial application of CDMA. Mr. Salmasi began his career as a research engineer at NASA JPL, and holds Bachelor’s degrees and Master’s degree with honors in Electrical Engineering, Business Management and Economics from Purdue University and a Master’s Degree in Applied Mathematics from the University of Southern California.
Our Market Opportunity
The technology sector has experienced tremendous transformation in recent years. The combination of big data, artificial intelligence, machine learning, ubiquitous high speed and mobile computing have fundamentally changed the way society operates. As part of this, businesses have begun to look at digital transformation as a means to modernize their communications infrastructure and technology in order to enable improvements in operational efficiency, innovation, customer engagement and experience, and remote work/work from home (‘WFH”). A key component of this enterprise transition is the adoption of cloud-first business strategies that enable customers and employees to access applications and services, anytime and anywhere. We believe we are still in the early days of this transition with only a fraction of an enterprise’s applications / workloads shifting to the cloud.
This transformation is creating a fundamental paradigm shift in how carriers and enterprises adopt their communications infrastructure and technology stacks. Where data is processed, how data is analyzed, how individuals communicate, and how networks are designed for flexibility, amongst many other changes, are all being driven by changes in technology. The five pillars of this new paradigm are next generation connectivity, open software, edge-cloud computing, predictive data analytics, and immersive media technologies. According to industry analysts, key segments of our five technology pillars offer a current industry size of $1 trillion growing to over $3.5 trillion in aggregate by 2027.
Next Generation Connectivity
Over the past two decades, the move to broadband internet and 4G mobile broadband has fundamentally changed the technology industry and created new multi-billion dollar businesses ranging from mobile app stores to enterprise SaaS to streaming subscription services. KINS believes the industry is poised for the next stage of transformation with the emergence of next generation connectivity technologies that deliver networks at gigabit speeds, operate at millisecond latencies, and provide unprecedented levels
of attachment density. We believe that these networks will catalyze the development of next generation of applications and services.
The next generation of connectivity platforms includes 5G, Wi-Fi 6, UWB, OpenRAN, SD-WAN, and SASE to deliver this new age communications experience. We expect these capabilities to disrupt traditional business models and enable new IoT services and immersive applications to monetize data traffic. KINS believes that new core technologies such as beamforming, network slicing, IoT security, and location sensing will be required to deliver these applications and services. Also, this network transformation is expected to have a profound impact on the broad technology landscape, creating opportunities beyond the boundaries of traditional network investments.
Open Software
The adoption of open source software and modern DevOps tools has transformed the software industry. These technologies are being integrated into the network, creating powerful platforms that support robust developer ecosystems and free network operators from dependence on their hardware vendors. Now, developers can utilize open source libraries, exposed APIs, and container technology to rapidly prototype and deploy applications that operate securely on shared network resources. Combined with 5G capabilities such as network slicing, open software networks will enable new applications such as V2X communications, telehealth, and real-time promotions while disrupting old business models. KINS thinks that open networks will create investment opportunities across the software stack, including middleware, integration tools, security, and applications.
Edge-Cloud Computing
The cloud has rapidly consumed server compute, storage, media (video and music) and many enterprise applications. The economics of virtual storage and compute combined with the user experience derived from unfettered data access is expected to continue to drive growth in cloud computing. However, there are trends pushing compute from large, centralized data centers toward the network edge. Real-time applications, such as industrial control, autonomous vehicles, and mixed reality, require low latency processing, and the vast amount of data generated by these sensor-based applications necessitates data “down-select” at the edge to minimize unnecessary traffic to cloud servers. Finally, the need for sustained operation and security concerns will push many mission-critical applications to on-premise edge servers. Traditional architectures are evolving to support microservices, containers, and distributed applications. Organizations will need to scale out their network as traffic patterns within and between data centers continue to change and security requirements become more demanding. KINS believes that the growth of edge computing will create new markets as enterprises and service providers look to build connected clouds (public & private) and integrate applications across the edge and core data centers.
Predictive Data Analytics
Enterprises and service providers are data wellheads. Data has traditionally resided underutilized in static domains. Increasingly, the key definer of organizational success is the ability to collect, analyze, and convert data into business intelligence. As the scale of data has exceeded human scale, organizations are deploying AIOps (artificial intelligence for IT operations) to exploit vast data sets and automate data analysis. KINS will target companies that leverage machine learning and artificial intelligence to build and deliver solutions supporting enhanced network performance, user experiences, and industrial efficiency.
Immersive Media Technologies
The explosive growth of data center and network capacity has been driven by migration of movies, TV, and music to cloud-based services. The disruption has been massive, resulting in new media platforms and the consolidation of legacy companies into media conglomerates. Through this transition, the consumer continues to value branded content, engagement, and shared experiences. Media companies
will adopt technologies that deliver compelling user experiences, and are investing heavily in 3D graphics, augmented reality, and mixed reality. These same technologies are being applied to deliver innovative industrial and commercial solutions that promote efficiency and safety. KINS will target companies developing the system and software infrastructure that supports the growing immersive media opportunity including applications that apply to industry, training, and education.
Current Market Environment
Over the past several months, COVID-19 has acted as an accelerant to all of these existing trends as companies seek to cut costs and prepare for a more distributed workforce. Worldwide, companies have rapidly transitioned to a WFH environment with many companies planning to continue remote work following the pandemic. This trend is driving demand for deep connectivity and transformational leaps in technological capabilities. At the same time, multi-national companies are reimagining their supply chains and reshoring significant portions of their logistic requirements to cater for the exploding consumer trend to have all items shipped to their homes.
This dislocation has presented a number of transformational opportunities to catalyze growth. In the near-term, increased online traffic from consumers working and shopping from home is driving the need for additional services and a heightened importance of network security and trust in vendors. However, there is an expected permanent increase in IT spend to enable a more distributed workforce, including the necessity of edge and distributed computing requirements, accelerated transitions to cloud deployments, and continued increase in network traffic.
Another key trend is that enterprises are looking for new revenue streams and business models in this new environment, and our technology pillars will be key to enabling those opportunities.
According to industry analysts, key segments of our five technology pillars offer a current industry size of $1 trillion growing to over $3.5 trillion in aggregate by 2027.
Our Business Strategy
Consistent with our strategy, we have identified the following general criteria and guidelines to evaluate prospective target businesses. We may, however, decide to enter into our initial business combination with a target business that does not meet these criteria and guidelines. We intend to seek to acquire one or more businesses that we believe:
•
have differentiated, transformational technology with a focus on next generation network and communications technologies;
•
operate within a significant and growing addressable market with runway for further growth;
•
have a validated business model, ability to scale, and have already gained a foothold in their markets;
•
have a rapid growth and sustainable profit margin profile;
•
are ready to operate in the scrutiny of public markets, with strong management, corporate governance and reporting policies in place;
•
will likely be well received by public investors and are expected to have continued access to the public capital markets;
•
have a proven and sophisticated management team with a track record and ability to create long-term shareholder value; and
•
will provide attractive return for shareholders with reasonable and appropriate valuation expectations and significant remaining upside.
These criteria and guidelines 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 criteria and guidelines as well as other considerations, factors, criteria, and guidelines 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 and guidelines in our stockholder communications
related to our initial business combination, which, as discussed in this prospectus, would be in the form of proxy materials or tender offer documents, as applicable, that we would file with the SEC.
Initial business combination
Nasdaq listing rules require that our initial business combination must be with one or more operating businesses or assets with a fair market value equal to at least 80% of the assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the income earned on the trust account). We refer to this as the 80% fair market value 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 or another independent entity that commonly renders valuation opinions with respect to the satisfaction of such criteria. We do not currently intend to purchase multiple businesses in unrelated industries in conjunction with our initial business combination, although there is no assurance that will be the case.
We anticipate structuring our initial business combination so that the post-transaction company in which our public stockholders own or acquire 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. However, 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 business 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 outstanding 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. 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 or issue a substantial number of new shares to third parties in connection with financing our initial business combination. In such cases, 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 outstanding 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 by us is what will be valued 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 and we will treat the target businesses together as the initial business combination for purposes of a tender offer or for seeking stockholder approval, as applicable. In addition, we have agreed not to enter into a definitive agreement regarding an initial business combination without the prior consent of our sponsor.
Our Acquisition Process
In evaluating a prospective target business, we expect to conduct a thorough due diligence review which may encompass, among other things, meetings with incumbent management and employees, document reviews, inspection of facilities, as well as a review of financial and other information that will be made available to us. We will also utilize our operational and capital allocation experience.
We are not prohibited from pursuing an initial business combination with a business that is affiliated with our initial stockholders, officers or directors, or any of their respective affiliates. In the event we seek to complete our initial business combination with a business that is affiliated with our initial stockholders, officers or directors, or any of their affiliates, we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm or another independent entity that commonly renders valuation opinions that our initial business combination is fair to us from a financial point of view.
Members of our management team will directly or indirectly own founder shares and/or private placement warrants 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 is included by a target business as a condition to our initial business combination.
Our officers and directors are from time to time 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 any prospective target business or had any substantive discussions, formal or otherwise, with respect to a business combination transaction with us.
Each of our officers and directors presently has, and any of them in the future may have additional, fiduciary, contractual or other obligations or duties 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 entities. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for one or more entities to which he or she has fiduciary, contractual or other obligations or duties, he or she will honor these obligations and duties to present such business combination opportunity to such entities first, and only present it to us if such entities reject the opportunity and he or she determines to present the opportunity to us. For more information, see the section entitled “Management—Conflicts of Interest.”
We do not believe, however, that the fiduciary duties or contractual obligations of our officers or directors will materially affect our ability complete our business combination. Our 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.
Corporate Information
Our executive offices are located at Four Palo Alto Square, Suite 200, 3000 El Camino Real, Palo Alto, CA 94306 and our telephone number is 650-575-4456. Upon completion of this offering, our corporate website address will be www.kins-tech.com. Our website and the information contained on, or that can be accessed through, the website is not deemed to be incorporated by reference in, and is not considered part of, this prospectus or the registration statement of which this prospectus forms a part. You should not rely on any such information in making your decision whether to invest in our securities.
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 auditor 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 that 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 end of that year’s second fiscal quarter, 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 end of that year’s second fiscal quarter.
The offering
In making your decision on whether to invest in our securities, you should take into account not only the backgrounds of the members of our management team, 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 of this prospectus entitled “Risk Factors.”
20,000,000 units (or 23,000,000 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-half of one redeemable warrant to purchase one share of Class A common stock.
Units: “KINZ.U”
Class A Common Stock: “KINZ”
Warrants: “KINZ WS”
Trading commencement and separation of Class A common stock and warrants
The units are expected to begin trading on or promptly after the date of this prospectus. The Class A common stock and warrants comprising the units will begin separate trading on the 52nd day following the date of this prospectus (or, if such date is not a business day, the following business day) unless the Representatives 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 two units, you will not be able to receive or trade a whole warrant.
Additionally, we expect that the units will automatically separate into their component
parts and will not be traded after completion of our initial business combination.
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 a Current Report on Form 8-K with the SEC containing an audited balance sheet 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. 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
20,000,000(1)
Common stock:
Number outstanding before this offering
5,750,000 shares of Class B common stock(2)(3)
Number outstanding after this offering
25,000,000 shares of common stock, consisting of 20,000,000 shares of Class A common stock and 5,000,000 shares of Class B common stock(1)(3)
Redeemable Warrants:
Number of private placement warrants to be sold in a private placement simultaneously with this offering
8,000,000(1)
Number of warrants to be outstanding after this offering and the private placement
18,000,000(1)
Each whole warrant is exercisable to purchase one share of our Class A common stock, subject to adjustment as provided herein, and only whole warrants are exercisable. No fractional
(1)
Assumes no exercise of the underwriters’ over-allotment option and the forfeiture by our sponsor of an aggregate of 750,000 founder shares.
(2)
Includes up to an aggregate of 750,000 shares that are subject to forfeiture by our sponsor depending on the extent to which the underwriters’ over-allotment option is exercised.
(3)
The shares of common stock included in the units are Class A common stock. Founder shares are classified as shares of Class B common stock, which shares are convertible into shares of our Class A common stock on a one-for-one basis, subject to adjustment as described below adjacent to the caption “Founder shares conversion and anti-dilution.”
warrants will be issued upon separation of the units and only whole warrants will trade.
$11.50 per share, subject to adjustment as described herein. In addition, if (x) we issue additional shares 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 (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 held by them 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 our initial business combination on the date of the consummation of our initial business combination (net of redemptions), and (z) the volume weighted average trading price of our shares of Class A common stock during the 20 trading day period starting on the trading day prior to 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 each warrant will be adjusted (to the nearest cent) such that the effective exercise price per full share will be equal to 115% of the higher of (i) the Market Value and (ii) the Newly Issued Price, and the $18.00 per-share redemption trigger price described adjacent to “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 higher of (i) the Market Value and (ii) the Newly Issued Price, and the $10.00 per-share redemption trigger price described adjacent to “Redemption of warrants when the price per share of Class A common stock equals or exceeds $10.00” will be adjusted (to the nearest cent) to be equal to the higher of (i) the Market Value and (ii) the Newly Issued Price.
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 issuance of 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 20 business days after the closing of our initial business combination, we will use our commercially reasonable efforts to file, and within 60 business days following our initial business combination to have declared effective, a registration statement under the Securities Act covering the issuance of the shares of Class A common stock issuable upon exercise of the warrants and to maintain the effectiveness of such registration statement and 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, but we will be required to use our commercially reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
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. 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;
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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
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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) 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 (or a security other than the 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) issuable upon exercise of the warrants is effective and a current prospectus relating to those shares of Class A 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. As a result, we may redeem the warrants as set forth above even if the holders are otherwise unable to exercise the warrants.
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 lesser of (A) 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” of our Class A common stock (defined below) over the exercise price of the warrants by (y) the fair market value and (B) 0.361 shares of Class A common stock per warrant. The “fair market value” of our Class A common stock for this purpose shall mean the volume-weighted average price of the Class A common stock as reported during the 10 trading days immediately following the date on which the notice of redemption is sent to the holders of warrants. Please see the section of this prospectus entitled “Description of Securities—Redeemable Warrants—Public Stockholders’ Warrants” for additional information.
None of the private placement warrants will be redeemable by us (except as set forth under “Redemption of warrants when the price per share of Class A common stock equals or exceeds $10.00”) so long as they are held by our sponsor, the direct anchor investors 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:
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in whole and not in part;
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at $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption 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—Redeemable Warrants—Public Stockholders’ Warrants” based on the redemption date and the “fair market value” of our Class A common stock (as defined above) except as otherwise described in “Description of
Securities—Redeemable Warrants—Public Stockholders’ Warrants”;
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if, and only if, the last reported sale price of our Class A common stock equals or exceeds $10.00 per share on the trading day prior to the date on which we send the notice of redemption to the warrant holders;
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if, and only if, the private placement warrants are also concurrently exchanged at the same price (equal to a number of shares of Class A common stock) as the outstanding public warrants, as described above; and
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if, and only if, there is an effective registration statement covering the issuance of the shares of Class A common stock (or a security other than the 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) issuable upon exercise of the warrants and a current prospectus relating thereto available throughout the 30-day period after written notice of redemption is given.
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This redemption feature differs from the typical warrant redemption features used in 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 exercise. If, upon exercise in connection with any 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—Redeemable Warrants—Public Stockholders’ Warrants” for additional information.
Election and removal of directors; voting rights
Prior to our initial business combination, only holders of our Class B common stock will have the right to vote on the election of directors. Holders of the Class A common stock will not be
entitled to vote on the election of directors during such time. In addition, prior to our initial business combination, holders of a majority of the outstanding shares of our Class B common stock may remove a member of our board of directors for any reason. These provisions of our certificate of incorporation may only be amended by a resolution passed by the holders of a majority of shares of our Class B common stock. With respect to any other matter submitted to a vote of our stockholders, including any vote in connection with our initial business combination, except as required by applicable law or stock exchange rule, holders of our Class A common stock and holders of our Class B common stock will vote together as a single class, with each share entitling the holder to one vote.
Our direct anchor investors have expressed to us an interest to purchase units in this offering and we have agreed to direct the underwriters to sell such units to our direct anchor investors. There can be no assurance that our direct anchor investors will acquire any units in this offering or what amount of equity our anchor investors will retain, if any, upon the consummation of our initial business combination. In the event that such direct anchor investors purchase such units (either in this offering or after) and vote them in favor of our initial business combination, it is possible that no votes from other public stockholders would be required to approve our initial business combination, depending on the number of shares that are present at the meeting to approve such transaction. As a result of the founder shares and private placement warrants that our direct anchor investors may hold (directly or indirectly), they may have different interests with respect to a vote on an initial business combination than other public stockholders.
Our direct anchor investors will have the same rights to the funds held in the trust account with respect to the common stock underlying the units they may purchase in this offering as the rights afforded to our public stockholders.
Additionally, certain investors identified by our sponsor may purchase units in this offering at the initial public offering price. The underwriters will not receive any underwriting discounts or commissions on the units purchased by such investors. In the event these investors purchase the units described above, such investors will have the same rights to the funds held in the trust
account with respect to the common stock underlying the units they may purchase in this offering as the rights afforded to our public stockholders.
At our request, the underwriters have reserved up to 5% of the units being offered by this prospectus for sale at the initial public offering price to our directors, officers, employees and other individuals associated with us and members of their families. The sales will be made by UBS Financial Services Inc., a selected dealer affiliated with UBS Securities LLC, an underwriter of this offering, through a directed unit program. We do not know if these persons will choose to purchase all or any portion of these reserved units, but any purchases they do make will reduce the number of units available to the general public. Any reserved units not so purchased will be offered by the underwriters to the general public on the same terms as the other units. Participants in the directed unit program who purchase more than $1,000,000 of units will be subject to a 25-day lock-up with respect to any units sold to them pursuant to that program. This lock-up will have similar restrictions and an identical extension provision to the lock-up agreements described above. Any units sold in the directed unit program to our directors or executive officers shall be subject to the lock-up agreements described in this prospectus.
In July 2020, our sponsor paid $25,000 to cover certain of our offering costs in exchange for 5,750,000 founder shares. In October 2020, our sponsor forfeited 625,000 founder shares and the direct anchor investors purchased 625,000 founder shares for an aggregate purchase price of approximately $2,717, or approximately $0.004 per share. Prior to this initial investment in the company of $25,000 by our sponsor, we had no assets, tangible or intangible. The per share purchase price of the founder shares was determined by dividing the amount of cash contributed to the company by the aggregate number of founder shares issued. The number of founder shares issued was determined based on the expectation that the founder shares would represent 20% of the outstanding shares after this offering. As such, our initial stockholders will collectively own 20% of our issued and outstanding shares of common stock upon the consummation of this offering (assuming they do not purchase any units in this offering). If we increase or decrease the size of this offering, we
will effect a stock dividend or a shares contribution back to capital or other appropriate mechanism, as applicable, with respect to our Class B common stock immediately prior to the consummation of this offering in such amount as to maintain the number of founder shares at 20% of the issued and outstanding shares of our common stock upon the consummation of this offering. Up to an aggregate of 750,000 founder shares will be subject to forfeiture by our sponsor depending on the extent to which the underwriters’ over-allotment option is exercised so that the number of founder shares will remain equal to 20% of our common stock after this offering.
The founder shares are identical to the shares of Class A common stock included in the units being sold in this offering, except that:
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prior to the completion of our initial business combination, only holders of the Class B common stock have the right to vote on the election of directors and holders of a majority of the outstanding shares of our Class B common stock may remove members of our board of directors for any reason;
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the founder shares are shares of Class B common stock that will automatically convert into shares of our Class A common stock at the time of our initial business combination, or earlier at the option of the holder (except for any founder shares held by the direct anchor investors who have agreed not to effect a conversion with respect to such founder shares until the consummation of the initial business combination), on a one-for-one basis, subject to adjustment pursuant to certain anti-dilution rights, as described herein;
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the founder shares are subject to certain transfer restrictions, as described in more detail below;
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our sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have agreed to waive (i) their redemption rights with respect to any founder shares and any public shares held by them in connection with the completion of our initial business combination, (ii) their
redemption rights with respect to any founder shares and any public shares held by them in connection with a stockholder vote to approve an amendment to our certificate of incorporation (A) to modify the substance or timing of our obligation to allow redemption in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination within 18 months from the closing of this offering or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity and (iii) their rights to liquidating distributions from the trust account with respect to any founder shares held by them if we fail to complete our initial business combination within 18 months from the closing of this offering or during any extended time that we have to consummate a business combination beyond 18 months as a result of a stockholder vote to amend our certificate of incorporation (an “Extension 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. If we submit our initial business combination to our public stockholders for a vote, we will complete our initial business combination only if a majority of the outstanding shares of common stock voted by the stockholders at a duly held stockholders meeting are voted to approve the initial business combination;
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The direct anchor investors have agreed to waive their right to liquidating distributions from the trust account with respect to any founder shares held by them if we fail to complete our business combination within 18 months from the closing of this offering and have also agreed to waive their redemption rights with respect to their founder shares, 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. Permitted transferees of the founder shares held by the direct anchor investors will be subject to the same restrictions;
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our sponsor, officers and directors have agreed to vote any founder shares and any public shares held by them in favor of our initial business combination. As a result, in addition to their founder shares, we would need 7,500,001, or 37.5% (assuming all outstanding shares are voted), or 1,250,001, or 6.25% (assuming only the minimum number of shares representing a quorum are voted), of the 20,000,000 public shares sold in this offering to be voted in favor of a transaction in order to have our initial business combination approved (in each case assuming the underwriters’ over-allotment option is not exercised); and
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the founder shares are subject to registration rights.
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 and (B) subsequent to our initial business combination, (x) if the last reported sale price of our Class A common stock equals or exceeds $12.00 per share 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 on which we complete a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property (except as described herein under the section of this prospectus entitled “Principal Stockholders—Restrictions on Transfers of Founder Shares and Private Placement Warrants”). We refer to such transfer restrictions throughout this prospectus as the lock-up. Our officers and directors are owners of our sponsor and, accordingly, will indirectly be subject to the lock-up.
Founder shares conversion and anti-dilution
rights
The shares of Class B common stock will automatically convert into shares of our Class A common stock at the time of our initial business
combination, or earlier at the option of the holder (except for any founder shares held by the direct anchor investors who have agreed not to effect a conversion with respect to such founder shares until the consummation of the initial business combination), on a one-for-one basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like, and subject to further adjustment as described herein. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in excess of the amounts issued in this offering and related to the closing of our initial business combination, including pursuant to a specified future issuance, the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the then-outstanding shares of Class B common stock agree to waive such adjustment with respect to any such issuance or deemed issuance, including pursuant to a specified future issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, on an as-converted basis, 20% of the sum of the total number of all shares of common stock outstanding upon the completion of this offering plus all 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 and excluding any shares or equity-linked securities issued or issuable to any seller in the initial business combination).
Private placement warrants
Our sponsor and the direct anchor investors have committed, pursuant to a written agreement, to purchase an aggregate of 8,000,000 private placement warrants (or 8,900,000 if the underwriters’ over-allotment option is exercised in full), each exercisable to purchase one share of our Class A common stock at $11.50 per share, subject to adjustment as provided herein, at a price of $1.00 per warrant ($8,000,000 in the aggregate or $8,900,000 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. Among the private placement warrants, 7,019,607 private placement warrants (or 7,919,607 private placement warrants if the underwriters’
over-allotment option is exercised in full) will be purchased by our sponsor and 980,393 private placement warrants will be purchased by the direct anchor investors. The private placement warrants are identical to the warrants sold as part of the units in this offering, subject to limited exceptions.
A portion of the purchase price of the private placement warrants will be added to the proceeds from this offering to be held in the trust account such that at the time of closing $202.0 million (or $232.3 million if the underwriters exercise their over-allotment option in full) will be held in the trust account. If we do not complete our initial business combination within 18 months from the closing of this offering or during any Extension Period, the proceeds from the sale of the private placement warrants 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 be non-redeemable (except as set forth under “Redemption of warrants when the price per share of Class A common stock equals or exceeds $10.00”) and exercisable on a cashless basis so long as they are held by our sponsor, the direct anchor investors or their permitted transferees. If the private placement warrants are held by holders other than our sponsor, the direct anchor investors 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.
Transfer restrictions on private placement
warrants
The private placement warrants (including the warrants that may be issued upon conversion of working capital loans and the Class A common stock issuable upon exercise of the private placement warrants and the working capital loans) will not be transferable, assignable or saleable until 30 days after the completion of our initial business combination (except as described under the section of this prospectus entitled “Principal Stockholders—Restrictions on Transfers of Founder Shares and Private Placement Warrants”). Our officers and directors are owners of our sponsor and, accordingly, will indirectly be subject to the above transfer restrictions.
Cashless exercise of private placement warrants
In addition to the cashless exercise described above adjacent to “Redemption of warrants when the price per share of Class A common stock equals or exceeds $18.00,” if holders of private placement warrants elect to exercise them on a cashless basis, they would pay the exercise price by surrendering their warrants for that number of shares of Class A common stock equal to the lesser of (A) 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 “private warrant fair market value” of our Class A common stock (defined above) over the exercise price of the warrants by (y) the private warrant fair market value and (B) 0.361 shares of Class A common stock per warrant. The “private warrant 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 warrant exercise is sent to the warrant agent.
The reason that we have agreed that these warrants will be exercisable on a cashless basis so long as they are held by our sponsor, the direct anchor investors or their permitted transferees is because it is not known at this time whether they will be affiliated with us following an initial 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 sell the shares of Class A common stock issuable upon exercise of the warrants freely in the open market, the insiders could be significantly restricted from doing so. As a result, we believe that allowing the holders to exercise such warrants on a cashless basis is appropriate.
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 warrants be deposited in a trust account. Of the net proceeds of this offering and the sale of the private placement warrants, $202,000,000, or $10.10 per unit ($232,300,000, or $10.10 per unit, if the underwriters’ over-allotment option is exercised
in full) will be placed into a U.S.-based trust account, with Continental Stock Transfer & Trust Company acting as trustee. These proceeds include up to $7,000,000 (or up to $8,050,000 if the underwriters’ over-allotment option is exercised in full) in deferred underwriting commissions. The underwriters will not receive any underwriting commissions on any units purchased in this offering by certain investors identified by our sponsor. The funds in the trust account will be held as cash or 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 tax obligations, the proceeds from this offering and the sale of the private placement warrants held in the trust account will not be released from the trust account until the earliest of (a) the completion of our initial business combination, (b) the redemption of any public shares properly submitted in connection with a stockholder vote to amend our certificate of incorporation (i) to modify the substance or timing of our obligation to allow redemptions in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination within 18 months from the closing of this offering or (ii) with respect to any other provisions relating to stockholders’ rights or pre-initial business combination activity and (c) the redemption of our public shares if we have not completed our initial business combination within 18 months from the closing of this offering, subject to applicable law. Stockholders who do not exercise their rights to the funds in connection with an amendment to our certificate of incorporation would still have rights to the funds in connection with a subsequent business combination. 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 and in connection with redemptions of our public shares in connection with certain amendments to our certificate of incorporation, unless and until we complete our initial business combination, no proceeds held in the trust account will be available for our use. The proceeds held in the trust account will be held as cash or 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 a current interest rate of 0.1%, we expect the trust account to generate approximately $202,000 of interest annually.
Unless and until we complete our initial business combination, we may pay our expenses only from:
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the net proceeds of this offering and the sale of the private placement warrants not held in the trust account, which will be approximately $1,250,000 in working capital after the payment of approximately $750,000 in expenses relating to this offering (such working capital amount to increase proportionally with the amount of underwriting discounts and commissions not paid to the underwriters in the event certain investors identified by the sponsor purchase units in this offering at the initial public offering price); and
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any loans or additional investments from our sponsor, members of our management team or their affiliates or other third parties (which may be converted into warrants upon consummation of an initial business combination, as described in this prospectus), although they are under no obligation to advance funds to, or invest in, us, and provided that any such loans will not have any claim on the proceeds held in the trust account unless such proceeds are released to us upon completion of our initial business combination The warrants would be identical to the private placement warrants issued to our sponsor.
Conditions to completing our initial business combination
There is no limitation on our ability to raise funds privately, including pursuant to any specified future issuance, or through loans in connection with our initial business combination. Nasdaq listing rules require that an initial business
combination must be with one or more operating businesses or assets with a fair market value equal to at least 80% of the assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the income earned on the trust account) at the time of signing the agreement to enter into the initial business combination. We refer to this as the 80% fair market value 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 or another independent entity that commonly renders valuation opinions 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 or acquire 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. However, 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 business sufficient for the post-transaction company 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 outstanding voting securities of the target, our stockholders prior to the 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 business combination transaction. If less than 100% of the outstanding 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 by us is what will be valued for purposes of the 80% fair market value test, provided that in the event that the business combination involves more than one target business, the 80% fair market value test will be based on the aggregate
value of all of the target businesses and we will treat the target businesses together as the initial business combination for purposes of a tender offer or for seeking stockholder approval, as applicable.
Permitted purchases of, and other transactions with respect to, our securities 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, advisors or their affiliates may purchase public 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. There is no limit on the number of securities our sponsor, directors, officers, advisors or their affiliates may purchase in such transactions, subject to compliance with applicable law and Nasdaq listing rules. 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. Additionally, at any time at or prior to our initial business combination, subject to applicable securities laws (including with respect to material nonpublic information), our initial stockholders, directors, officers, advisors or their affiliates may enter into transactions with investors and others to provide them with incentives to acquire public shares, vote their public shares in favor of our initial business combination or not redeem their public shares. 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. Such persons will be subject to restrictions in making any such purchases when they are in possession of any material non-public information 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 be required to comply with such rules. Subsequent to the consummation of this offering, we will adopt an
insider trading policy which will require insiders to refrain from purchasing our securities during certain blackout periods and when they are in possession of any material non-public information and 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 such purchases 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.
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, calculated 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 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 $10.10 per public share. The per-share amount we will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting commissions we will pay to the underwriters. The redemption rights will include the requirement that a beneficial holder must identify itself in order to validly redeem its shares. There will be no redemption rights upon the completion of our initial business combination with respect to our warrants. Our sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have agreed to waive (i) their redemption rights with respect to any founder shares and any public shares held by them in connection with the completion of our initial business combination and (ii) their redemption rights with respect to any founder shares and any public shares held by them in connection with a stockholder vote to approve an amendment to our certificate of incorporation (A) to modify the substance or timing of our obligation to allow redemption in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination
within 18 months from the closing of this offering or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity.
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 (i) in connection with a stockholder meeting called to approve the business combination or (ii) by means of a tender offer. Except as required by applicable law or stock exchange rule, 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 otherwise require us to seek stockholder approval under stock exchange listing requirements. 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 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 listing requirements 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 certificate of incorporation:
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conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers, and
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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 under the Exchange Act 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 that 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 will only redeem our public shares so long as (after such redemption) our net tangible assets will be at least $5,000,001 either immediately prior to or upon consummation of our initial business combination and after payment of underwriters’ fees and commissions (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 the initial business combination, and instead may search for an alternative business combination.
If, however, stockholder approval of the transaction is required by applicable law or stock exchange listing requirements, or we decide to obtain stockholder approval for business or other reasons, we will:
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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
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file proxy materials with the SEC.
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If we seek stockholder approval, we will complete our initial business combination only if a majority of the outstanding shares of common stock
voted by the stockholders at a duly held stockholders meeting are voted to approve 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. Our sponsor, officers and directors will count towards this quorum and have agreed to vote any founder shares and any public shares held by them in favor of our initial business combination. For purposes of seeking approval of the majority of our outstanding shares of common stock voted, non-votes will have no effect on the approval of our initial business combination once a quorum is obtained. As a result, in addition to their founder shares, we would need only 7,500,001, or 37.5% (assuming all outstanding shares are voted), of the 20,000,000 public shares sold in this offering to be voted in favor of a transaction in order to have our initial business combination approved (assuming the underwriters’ over-allotment option is not exercised). However, because we generally only need a majority of the outstanding shares to be voted in favor of a proposed business combination to have such transaction approved, the number of public shares needed to be voted in favor of any transaction decreases as the overall number of public shares voted decreases. Accordingly, we would need only 1,250,001, or 6.25%, of the 20,000,000 public shares sold in this offering to be voted in favor of a transaction if only the minimum number of shares representing a quorum are voted in order to have our initial business combination approved (assuming the underwriters’ over-allotment option is not exercised). In addition, as a result of the founder shares and private placement warrants that our direct anchor investors may hold (directly or indirectly), they may have different interests with respect to a vote on an initial business combination than other public stockholders.
Pursuant to Delaware law, we will not give 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 initial business combination. These quorum and voting thresholds, and the voting agreements of our sponsor, officers and directors, may make it more likely that we will consummate our initial business combination. 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.
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 tender or electronically deliver their shares to our transfer agent up to two business days prior to the vote on the proposal to approve the business combination in the event we distribute proxy materials. The proxy materials 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. If the proposed business combination is not approved and we continue to search for a target company, we will promptly return any certificates delivered, or shares tendered electronically, by public stockholders who elected to redeem their shares.
Our certificate of incorporation will provide that we will only redeem our public shares so long as (after such redemption) our net tangible assets will be at least $5,000,001 either immediately prior to or upon consummation of our initial business combination (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. For example, the proposed business combination may require: (i) cash consideration to be paid to the target or its owners, (ii) cash to be transferred to the target for working capital or other general corporate purposes or (iii) 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, and instead may search for an alternative business combination.
Limitation on redemption rights of stockholders holding more than 15% of the shares sold in this offering if we hold a 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 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, which we refer to herein as the “Excess Shares,” 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 management 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 management 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 blank check companies have a provision in their charter which prohibits the amendment of certain charter provisions. Our 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 sale of the private placement warrants into the trust account and not release such amounts except in specified circumstances, and to provide redemption rights to public stockholders as described herein) may be amended if approved by holders of at least 65% of our outstanding common stock entitled to vote thereon, and corresponding provisions of the trust agreement governing the release of funds from our trust account may be amended if approved by holders of at least 65% of our outstanding common stock entitled to vote thereon; provided that amendments relating to the appointment or removal of directors prior to our initial business combination require a resolution passed by the holders of a majority of shares of our Class B common stock. In all other instances, our certificate of incorporation may be amended by holders of a majority of our outstanding common stock entitled to vote thereon, subject to applicable provisions of the Delaware General Corporation Law, or DGCL, or applicable stock exchange listing requirements. We may not issue additional securities that would entitle the holders thereof, prior to our initial business combination, to (1) receive funds from the trust account or (2) vote as a class with our public shares (a) on any initial business combination or (b) to approve an amendment to our certificate of incorporation. Our initial stockholders, who will collectively beneficially own 20.0% of our common stock upon the closing of this offering (assuming they do not purchase any units in this offering), may participate in any vote to amend our certificate of incorporation and/or trust agreement and will have the discretion to vote in any manner they choose. Our sponsor, officers, and directors have agreed, pursuant to a letter agreement with us (filed as an exhibit to the registration statement of which this prospectus forms a part), that they will not propose any amendment to our certificate of incorporation (A) to modify the substance or timing of our obligation to allow redemption in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination within 18 months
from the closing of this offering or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity, unless we provide our public stockholders with the opportunity to redeem their public 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 public shares. Our sponsor, officers and directors have also agreed to waive (i) their redemption rights with respect to any founder shares and any public shares held by them in connection with the completion of our initial business combination and (ii) their redemption rights with respect to any founder shares and any public shares held by them in connection with a stockholder vote to approve an amendment to our certificate of incorporation (A) to modify the substance or timing of our obligation to allow redemption in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination within 18 months from the closing of this offering or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity. The direct anchor investors have agreed to waive their right to liquidating distributions from the trust account with respect to their founder shares, 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.
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 disbursed directly by the trustee or released to us to pay amounts due to any public stockholders who properly 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 deferred underwriting commissions, 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. If our initial business combination is paid for using equity or debt, 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 assets, companies or for working capital.
Redemption of public shares and distribution and liquidation if no initial business combination
Our certificate of incorporation provides that we will have only 18 months from the closing of this offering to complete our initial business combination. If we have not completed our initial business combination within such time period or during any Extension Period, we 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 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 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); and (iii) 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 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 business combination within the allotted time period.
Our sponsor, officers, directors and the direct anchor investors have waived their rights to liquidating distributions from the trust account with respect to any founder shares held by them if we fail to complete our initial business combination within 18 months from the closing of this offering or during any Extension Period. However, if they 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 complete our
initial business combination within the allotted time period.
The underwriters have agreed to waive their rights to their deferred underwriting commission held in the trust account in the event we do not complete our initial business combination and subsequently liquidate and, in such event, such amounts will be included with the funds held in the trust account that will be available to fund the redemption of our public shares.
Limited payments to insiders
There will be no finder’s fees, reimbursements or cash payments made by us to our sponsor, officers or directors, or our or 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 sponsor, officers or directors, or our or their affiliates, none of which will be made from the proceeds of this offering and the sale of the private placement warrants held in the trust account prior to the completion of our initial business combination:
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Repayment of an aggregate of up to $300,000 in loans made to us by our sponsor under a note;
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Payment of service and administrative fees to our sponsor, of $20,000 per month for up to 18 months;
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Reimbursement for any out-of-pocket expenses related to identifying, investigating and completing an initial business combination;
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Repayment of loans which may be made to us to finance working capital and transaction costs in connection with an intended initial business combination. Up to $1,500,000 of such loans may be convertible into warrants, at a price of $1.00 per warrant at the option of the lender. The warrants would be identical to the private placement warrants; and
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At the closing of our initial business combination, we may pay customary financial consulting fees. We may pay such financial consulting fees in the event our initial stockholders, officers or directors, provide us with specific target company, industry, financial or market expertise, as well as insights,
relationships, services or resources in order to assess, negotiate and consummate an initial business combination. The amount of any such financial consulting fee we pay will be based upon the prevailing market for similar services for comparable transactions at such time, and will be subject to the review of our audit committee pursuant to the audit committee’s policies and procedures relating to transactions that may present conflicts of interest. We would disclose any such fee in the proxy or tender offer materials used in connection with a proposed business combination.
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Our audit committee will review on a quarterly basis all payments that were made by us to our sponsor, officers or directors, or our or their affiliates.
We will establish and maintain an audit committee, which will be composed entirely of independent directors 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 of this prospectus entitled “Management—Committees of the Board of Directors—Audit Committee.”
Each of our officers and directors presently has, and any of them in the future may have additional, fiduciary, contractual or other obligations or duties 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 entities. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for one or more entities to which he or she has fiduciary, contractual or other obligations or duties, he or she will honor these obligations and duties to present such business combination opportunity to such entities first, and only present it to us if such entities reject the opportunity and he or she determines to present the opportunity to us. We do not believe, however, that the fiduciary duties or contractual obligations of our officers or directors will
materially affect our ability complete our business combination. Our 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 more information, see the section entitled “Management—Conflicts of Interest.”
Certain of our officers and directors are now, and all of them may in the future become, affiliated with entities that are engaged in a business similar to ours, although our sponsor and officers and directors (excluding independent directors) have agreed not to participate in the formation of, or become an officer or director of, any other special purpose acquisition company with a class of securities registered under the Exchange Act which has publicly filed a registration statement with the SEC until we have entered into a definitive agreement regarding our initial business combination or we have failed to complete our initial business combination within 18 months after the closing of this offering or during any Extension Period.
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 by 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 (i) $10.10 per public share or (ii) 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 taxes. This liability will not apply with respect 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, then our sponsor will not be responsible to the extent of any liability for such third-party claims. Our independent registered public accounting firm will not execute agreements with us waiving such claims to the monies held in the trust account,
nor will the underwriters of this offering. We have not independently verified whether our sponsor, which is a newly formed entity, has sufficient funds to satisfy its indemnity obligations and believe that our sponsor’s only assets are securities of our company. We have not asked our sponsor to reserve for such indemnification obligations. Therefore, we believe it is unlikely our sponsor would be able to satisfy those obligations. None of our officers will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
Risks
We are a newly formed company that has conducted no operations and has generated no revenues. Until we complete our initial business combination (at the earliest), we will have no operations and will generate no operating revenues. In making your decision whether to invest in our securities, you should take into account not only the background of our management team, but also the special risks we face as a blank check company. This offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act. Accordingly, you will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. For additional information concerning how Rule 419 blank check offerings differ from this offering, please see the section of this prospectus entitled “Proposed Business—Comparison of This Offering to Those of Blank Check Companies Subject to Rule 419.” You should carefully consider these and the other risks set forth in the section of this prospectus entitled “Risk Factors.”
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.
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|
|
September 30,
2020
|
|
|
July 27,
2020
|
|
| |
|
|
(Unaudited)
|
|
|
(Audited)
|
|
|
Balance Sheet Data:
|
|
|
|
|
|
|
Working capital (deficiency)
|
|
|
$
(350,959)
|
|
|
$
(27,000)
|
|
|
Total assets
|
|
|
$
374,959
|
|
|
$
51,000
|
|
|
Total liabilities
|
|
|
$
350,959
|
|
|
$
27,000
|
|
|
Stockholder’s equity
|
|
|
$
24,000
|
|
|
$
24,000
|
|
If no business combination is completed within 18 months from the closing of this offering or during any Extension Period, 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 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 agreed to waive their rights to liquidating distributions from the trust account with respect to any founder shares held by them if we fail to complete our initial business combination within such time period.
Cautionary Note Regarding Forward-Looking Statements and Risk Factor Summary
Certain statements 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,” “intend,” “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:
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our ability to select an appropriate target business or businesses;
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our ability to complete our initial business combination;
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our expectations around the performance of the prospective target business or businesses;
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our success in retaining or recruiting, or changes required in, our officers, key employees or directors following our initial business combination;
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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;
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our potential ability to obtain additional financing to complete our initial business combination;
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our pool of prospective target businesses with proprietary network communications technology;
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our ability to consummate an initial business combination due to the uncertainty resulting from the COVID-19 pandemic;
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the ability of our officers and directors to generate a number of potential business combination opportunities;
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our public securities’ potential liquidity and trading;
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the lack of a market for our securities;
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the use of proceeds not held in the trust account or available to us from interest income on the trust account balance;
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the trust account not being subject to claims of third parties; or
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our financial performance following this offering or an initial business combination.
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 in the section of this prospectus entitled “Risk Factors.” 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.
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 Relating to our Search for, Consummation of or Inability to Consummate, a Business Combination
Our public stockholders may not be afforded an opportunity to vote on our proposed 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. Except as required by applicable law, 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 under stock exchange listing requirements. Accordingly, we may complete our initial business combination even if holders of a majority of our public shares do not approve of the business combination we complete. Please see the section of this prospectus 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 sponsor, officers and directors have agreed to vote their shares in favor of such initial business combination, regardless of how our public stockholders vote.
Our sponsor, officers and directors have agreed to vote any founder shares and any public shares held by them in favor of our initial business combination. As a result, in addition to their founder shares, we would need only 7,500,001, or 37.5% (assuming all outstanding shares are voted), of the 20,000,000 public shares sold in this offering to be voted in favor of a transaction in order to have our initial business combination approved (assuming the underwriters’ over-allotment option is not exercised). However, because we generally only need a majority of the outstanding shares to be voted in favor of a proposed business combination to have such transaction approved, the number of public shares needed to be voted in favor of any transaction decreases as the overall number of public shares voted decreases. Accordingly, we would need only 1,250,001, or 6.25%, of the 20,000,000 public shares sold in this offering to be voted in favor of a transaction if only the minimum number of shares representing a quorum are voted in order to have our initial business combination approved (assuming the underwriters’ over-allotment option is not exercised). In addition, as a result of the founder shares and private placement warrants that our direct anchor investors may hold (directly or indirectly), they may have different interests with respect to a vote on an initial business combination than other public stockholders. Our initial stockholders will own shares representing at least 20.0% of our outstanding shares of common stock immediately following the completion of this offering. Accordingly, if we seek stockholder approval of our initial business combination, it is more likely that the necessary stockholder approval will be received than would be the case if our sponsor, officers and directors agreed to vote their founder 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 the 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 any target businesses. 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. 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 in connection with the consummation of an initial business combination.
The ability of our public stockholders to redeem their shares for cash may make our financial condition unattractive to potential target businesses, 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, we will only redeem our public shares so long as (after such redemption) our net tangible assets will be at least $5,000,001 either immediately prior to or upon consummation of our initial business combination and after payment of underwriters’ fees and commissions (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 immediately prior to or upon completion of our initial business combination or such greater amount necessary to satisfy a closing condition, each 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, if at all, 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 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 deferred underwriting commissions payable to the underwriters will not be adjusted for any shares that are redeemed in connection with a business combination. The per-share amount we will distribute to stockholders who properly exercise their redemption rights will not be reduced by the deferred underwriting commission and after such redemptions, the per-share value of shares held by non-redeeming stockholders will reflect our obligation to pay the deferred underwriting commissions.
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 is increased. 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 target businesses, 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 18 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 timeframe described above. In addition, we may have limited time to conduct due diligence. As a result, we may be forced to enter into an agreement for an initial business combination on terms that we would have rejected had we had more time to complete a transaction.
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 recent coronavirus (COVID-19) outbreak and other events, and the status of debt and equity markets.
In December 2019, a novel strain of coronavirus was reported to have surfaced, which has and is continuing to spread throughout the world, including the United States. On January 30, 2020, the World Health Organization declared the outbreak of the coronavirus disease ( COVID-19) a “Public Health Emergency of International Concern.” On January 31, 2020, the U.S. Health and Human Services Secretary 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 adversely affected, and other events (such as terrorist attacks, natural disasters or a significant outbreak of other infectious diseases) could adversely affect, the economies and financial markets worldwide, and the business of any potential target business with which we consummate a business combination could be 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 events (such as terrorist attacks, natural disasters or a significant outbreak of other infectious diseases) 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 (such as terrorist attacks, natural disasters or a significant outbreak of other infectious diseases), including as a result of increased market volatility, decreased market liquidity in 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 only receive $10.10 per share, or less than such amount in certain circumstances, and our warrants will expire worthless.
Our certificate of incorporation provides that we must complete our initial business combination within 18 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. If we have not completed our initial business combination within such time period or during any Extension Period, we 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 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 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); and (iii) 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 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 only receive $10.10 per share, and our warrants will expire worthless. In certain circumstances, our public stockholders may receive less than $10.10 per share on the redemption of their shares. 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 $10.10 per share” and other risk factors in this section.
If we are unable to complete an initial business combination within the 18-month period, we may seek an amendment to our certificate of incorporation to extend the period of time we have to complete an initial business combination beyond 18 months. Our certificate of incorporation will require that such an amendment be approved by holders of at least 65% of our outstanding common stock.
If we seek stockholder approval of our initial business combination, our initial stockholders, directors, officers, advisors or their affiliates may enter into certain transactions, including purchasing shares or warrants from the public, which may influence the outcome of a proposed business combination and reduce the public “float” of our securities.
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, advisors or their affiliates may purchase public 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. 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. In the event that our initial stockholders, directors, officers, advisors or their affiliates purchase shares in privately negotiated transactions from public stockholders who have already elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem their shares. Additionally, at any time at or prior to our initial business combination, subject to applicable securities laws (including with respect to material nonpublic information), our initial stockholders, directors, officers, advisors or their affiliates may enter into transactions with investors and others to provide them with incentives to acquire public shares, vote their public shares in favor of our initial business combination or not redeem their public shares. 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. The purpose of any such transaction could be to (1) vote such shares in favor of the initial business combination and thereby increase the likelihood
of obtaining stockholder approval of the initial business combination, (2) reduce the number of public warrants outstanding or to vote such warrants on any matters submitted to the warrant holders for approval in connection with our initial business combination or (3) 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 Class A common stock or warrants and the number of beneficial holders of our securities may be reduced, possibly making it difficult to obtain or maintain 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, if we hold a stockholder meeting to approve a transaction, 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 up to two business days prior to the vote on the proposal to approve the business combination 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 the section of this prospectus entitled “Proposed Business—Redemption Rights for Public Stockholders upon Completion of our Initial Business Combination—Tendering Stock Certificates in Connection with a Stockholder Meeting.”
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 warrants are intended to be used to complete an initial business combination with a target business that has not been selected, we may be deemed to be a “blank check” company under the United States 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 warrants 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 an initial business combination. For a more detailed comparison of our offering to offerings that comply with Rule 419, please see the section of this prospectus entitled “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 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. However, our certificate of incorporation does not restrict 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.
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 $10.10 per share on our redemption of our public shares, or less than such amount in certain circumstances, 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 we intend to acquire. 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 are numerous target businesses we could potentially acquire with the net proceeds of this offering and the sale of the private placement warrants, our ability to compete with respect to the acquisition of certain target businesses that are sizable will be limited by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses.
Furthermore, because we are obligated to pay cash for the shares of Class A common stock which our public stockholders redeem in connection with our initial business combination, target companies will be aware that this may reduce the resources available to us for our initial business combination. Additionally, our outstanding warrants, and the future dilution they potentially represent, may not be viewed favorably by target businesses. This may place us at a competitive disadvantage in successfully negotiating and completing an initial business combination. If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.10 per share on the liquidation of our trust account and our warrants will expire worthless. In certain circumstances, our public stockholders may receive less than $10.10 per share upon our liquidation. 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 $10.10 per share” and other risk factors in this section.
If the net proceeds of this offering and the sale of the private placement warrants not being held in the trust account are insufficient to allow us to operate for at least 18 months following the closing of this offering, we may be unable to complete our initial business combination, in which case our public stockholders may only receive $10.10 per share, or less than such amount in certain circumstances, and our warrants will expire worthless.
Of the net proceeds of this offering and the sale of the private placement warrants, only approximately $1,250,000 will be available to us initially outside the trust account to fund our working capital requirements (such working capital amount to increase proportionally with the amount of underwriting discounts and commissions not paid to the underwriters in the event certain investors identified by the sponsor purchase
units in this offering at the initial public offering price). In the event that our offering expenses exceed our estimate of $750,000, 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 $750,000, the amount of funds we intend to be held outside the trust account would increase by a corresponding amount. The funds available to us outside of the trust account may not be sufficient to allow us to operate for at least the 18 months following the closing of this offering, assuming that our initial business combination is not completed during that 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 18 months following the closing of this offering; however, we cannot assure you that our estimate is accurate. If we are required to seek additional capital, we would need to borrow funds from our initial stockholders, management team or other third parties to operate, or we may be forced to liquidate. None of our initial stockholders, members of our management team nor any of their affiliates is under any obligation to advance funds to, or invest in, us in such circumstances. If we do not have sufficient funds to continue searching for, or conduct due diligence with respect to, a target business, we may not be able to consummate an initial business combination. If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.10 per share on the liquidation of our trust account and our warrants will expire worthless. In certain circumstances, our public stockholders may receive less than $10.10 per share upon our liquidation. 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 $10.10 per share” and other risk factors in this section.
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 $10.10 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 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. Making such a request of potential target businesses may make our acquisition proposal less attractive to them and, to the extent prospective target businesses refuse to execute such a waiver, it may limit the field of potential target businesses that we might pursue. Our independent registered public accounting firm will not execute agreements with us waiving such claims to the monies held in the trust account, nor will the underwriters of this offering.
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 management is 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 have not completed 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 $10.10 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 by 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 (i) $10.10 per public share or (ii) 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 taxes. This liability will not apply with respect 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, then 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, which is a newly formed entity, has sufficient funds to satisfy its indemnity obligations and believe that our sponsor’s only assets are securities of our company. We have not asked our sponsor to reserve for such indemnification obligations. Therefore, we believe it is unlikely our sponsor would be able to satisfy those obligations. As a result, if any such claims were successfully made against the trust account, the funds available for our initial business combination and redemptions could be reduced to less than $10.10 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 public share in connection with any redemption of your public shares. None of our officers will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
Our independent 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 (i) $10.10 per public share or (ii) 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 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 may choose not to do so if, for example, the cost of such legal action is deemed by the independent directors to be too high relative to the amount recoverable or if the independent directors determine that a favorable outcome is not likely. 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 $10.10 per share.
The securities in which we invest the proceeds held in the trust account could bear a negative rate of interest, which could reduce the interest income available for payment of taxes or reduce the value of the assets held in trust such that the per share redemption amount received by public stockholders may be less than $10.10 per share.
The net proceeds of this offering and certain proceeds from the sale of the private placement warrants, in the amount of $202,000,000, will be held in an interest-bearing trust account. The proceeds held in the trust account may only be invested in direct U.S. government securities with a maturity of 185 days or less, or in certain money market funds which invest only in direct U.S. Treasury obligations. While short-term U.S. government treasury obligations currently yield a positive rate of interest, they have briefly yielded negative interest rates in recent years. Central banks in Europe and Japan pursued interest rates below zero in recent years, and the Open Market Committee of the Federal Reserve has not ruled out the possibility that it may in the future adopt similar policies in the United States. In the event of very low or negative yields, the amount of interest income (which we may withdraw to pay income
taxes, if any) would be reduced. In the event that we are unable to complete our initial business combination, our public stockholders are entitled to receive their share of the proceeds held in the trust account, plus any interest income. If the balance of the trust account is reduced below $202,000,000 as a result of negative interest rates, the amount of funds in the trust account available for distribution to our public stockholders may be reduced below $10.10 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 we and our board may be exposed 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 stockholders in connection with our liquidation may be reduced.
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:
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restrictions on the nature of our investments; and
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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:
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registration as an investment company with the SEC;
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adoption of a specific form of corporate structure; and
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reporting, record keeping, voting, proxy and disclosure requirements and compliance with other rules and regulations that we are currently not subject to.
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 total 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 only be invested in United States “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. Pursuant to the trust agreement, the trustee is not permitted to invest in other securities or assets. By restricting the investment of the proceeds 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: (i) the completion of an initial business combination; (ii) the redemption of any public shares properly submitted in connection with a stockholder vote to amend our certificate of incorporation (A) to modify the substance or timing of our obligation to allow redemption in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination within 18 months from the closing of this offering or (B) with respect to any other provisions relating to stockholders’ rights or pre-initial business combination activity; and (iii) absent a business combination, our return of the funds held in the trust account to our public stockholders as part of our redemption of the public shares. Stockholders who do not exercise their rights to the funds in connection with an amendment to our certificate of incorporation would still have rights to the funds in connection with a subsequent business combination. 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 complete a business combination. If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.10 per share on the liquidation of our trust account and our warrants will expire worthless. In certain circumstances, our public stockholders may receive less than $10.10 per share on the redemption of their shares. 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 $10.10 per share” and other risk factors in this section.
Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, investments 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.
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 the required time period 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 18th month from the closing of this offering (or the end of any Extension Period) in the event we do not complete our initial business combination and, therefore, we do not intend to comply with the foregoing procedures.
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 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 to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment bankers, 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 the required time period 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, which could delay the opportunity for our stockholders to elect directors.
In accordance with Nasdaq corporate governance requirements, we are not required to hold an annual meeting until no 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. Until we hold an annual meeting of stockholders, public stockholders may not be afforded the opportunity to discuss company affairs with management. In addition, prior to our business combination (a) as holders of our Class A common stock, our public stockholders will not have the right to vote on the appointment of our directors and (b) holders of a majority of the outstanding shares of our Class B common stock may remove a member of our board of directors for any reason.
The grant of registration rights to our initial stockholders 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 on or prior to the closing of 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. In addition, holders of our private placement warrants and their permitted transferees can demand that we register the resale of the private placement warrants and the shares of Class A common stock issuable upon exercise of the private placement warrants, and holders of warrants that may be issued upon conversion of working capital loans may demand that we register the resale of such warrants or the Class A common stock issuable upon exercise of such warrants. We will bear the cost of registering these securities. 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 conclude. This is because the shareholders 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, holders of our private placement warrants or holders of our working capital loans or their respective permitted transferees are registered for resale.
Because we are not limited to a particular industry, sector or geographic area nor have we selected 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’ operations.
Although we expect to focus our search for a target business possessing transformative technology in communications and computing, we may seek to complete our initial business combination with a target business in any industry, sector or geographic area. However, we will not, under our certificate of incorporation, be permitted to complete our initial business combination solely with another blank check company or similar company with nominal operations. Because we have not yet selected or approached 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 revenues 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 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 target business. 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 security holders are unlikely to have a remedy for such reduction in value.
We may seek acquisition opportunities in industries or sectors which may or may not be outside of our management’s area of expertise.
We will consider a business combination outside of our management’s area of expertise if a business combination candidate is presented to us and we determine that such candidate offers an attractive acquisition 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 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. In the event we elect to pursue an acquisition outside of the areas of our management’s expertise, our management’s expertise may not be directly applicable to its evaluation or operation, and the information contained in this prospectus regarding the areas of our management’s expertise would not be relevant to an understanding of the business that we elect to acquire. As a result, our management may not be able to adequately ascertain or assess all the significant risk factors. 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 security holders are unlikely to have a remedy for such reduction in value.
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 listing requirements, 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 $10.10 per share, or less in certain circumstances, on the liquidation of our trust account and our warrants will expire worthless. In certain circumstances, our public stockholders may receive less than $10.10 per share on the redemption of their shares. 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 $10.10 per share” and other risk factors in this section.
We may seek acquisition opportunities with an early stage company, a private company, a financially unstable business or an entity lacking an established record of revenue or earnings, which could subject us to volatile revenues or earnings or difficulty in retaining key personnel.
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 revenues 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 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 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 may also seek to complete 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 may not obtain an opinion from an independent valuation provider, and consequently, you may have no assurance from an independent source that our initial business combination is fair to our company from a financial point of view.
Unless we complete our business combination with an affiliated entity, we are not required to obtain an opinion from an independent investment banking firm or from another independent entity that commonly renders valuation opinions that our initial business combination 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 proxy solicitation or tender offer materials, as applicable, related to our initial business combination.
We may issue additional 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 B 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 contained in our certificate of incorporation. Any such issuances would dilute the interest of our stockholders and likely present other risks.
Our certificate of incorporation will authorize the issuance of up to 200,000,000 shares of Class A common stock, par value $0.0001 per share, 20,000,000 shares of Class B common stock, par value $0.0001 per share, and 2,000,000 shares of preferred stock, par value $0.0001 per share. Immediately after this offering, there will be 180,000,000 and 15,000,000 authorized but unissued shares of Class A common stock and Class B common stock, respectively, available for issuance (assuming, in each case, that the underwriters have not exercised their over-allotment option), which amount does not take into account the shares of Class A common stock reserved for issuance upon exercise of any outstanding warrants or the shares of Class A common stock issuable upon conversion of Class B common stock. Immediately after the consummation of this offering, there will be no shares of preferred stock issued and outstanding. Shares of Class B common stock are convertible into shares of our Class A common stock initially at a one-for-one ratio but subject to adjustment as set forth herein, including in certain circumstances in which we issue Class A common stock or equity-linked securities related to our initial business combination.
We may issue a substantial number of additional shares of common or preferred stock to complete our initial business combination (including pursuant to a specified future issuance) 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—Redeemable 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 B 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 contained in our certificate of incorporation. Our Class B common stock shall only be convertible at the time of our initial business combination. However, our certificate of incorporation will provide, among other things, that prior to our initial business combination, we may not issue additional securities that would entitle the holders thereof, to (1) receive funds from the trust account or (2) vote as a class with our public shares (a) on any initial business combination or (b) to approve an amendment to our certificate of incorporation. The restriction on issuing additional shares of capital stock described in the prior sentence will expire upon consummation of our initial business combination. The issuance of additional shares of common or preferred stock:
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may significantly dilute the equity interest of investors in this offering, which dilution would increase if the anti-dilution provisions in the Class B common stock resulted in the issuance of Class A shares on a greater than one-to-one basis upon conversion of the Class B common stock;
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may subordinate the rights of holders of our common stock if preferred stock is issued with rights senior to those afforded our common stock;
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could cause a change of control if a substantial number of shares of our 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;
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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;
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may adversely affect prevailing market prices for our units, Class A common stock and/or warrants; and
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may not result in adjustment to the exercise price of our warrants.
Resources could be wasted in researching acquisitions 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 $10.10 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 $10.10 per share on the liquidation of our trust account and our warrants will expire worthless. In certain circumstances, our public stockholders may receive less than $10.10 per share on the redemption of their shares. 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 $10.10 per share” and other risk factors in this section.
Since our sponsor, officers and directors will lose their entire investment in us if our business combination is not completed, a conflict of interest may arise in determining whether a particular target business is appropriate for our initial business combination.
In July 2020, our sponsor acquired 5,750,000 founder shares in exchange for a capital contribution of $25,000. In October 2020, our sponsor forfeited 625,000 founder shares and the direct anchor investors purchased 625,000 founder shares for an aggregate purchase price of approximately $2,717, or approximately $0.004 per share. Prior to the initial investment in the company of $25,000, we had no assets, tangible or intangible. The number of founder shares issued was determined based on the expectation that such founder shares would represent 20% of the outstanding shares after this offering. The founder shares will be worthless if we do not complete an initial business combination. In addition, our sponsor and direct anchor investors have committed to purchase an aggregate of 8,000,000 (or 8,900,000 if the underwriters’ over-allotment option is exercised in full) private placement warrants, each exercisable for one share of our Class A common stock at $11.50 per share, subject to adjustment, for a purchase price of approximately $8,000,000 (or approximately $8,900,000 if the underwriters’ over-allotment option is exercised in full), or $1.00 per warrant, that will also be worthless if we do not complete our initial business combination within the allocated time period. Among the private placement warrants, 7,019,607 private placement warrants (or 7,919,607 private placement warrants if the underwriters’ over-allotment option is exercised in full) will be purchased by our sponsor and 980,393 private placement warrants will be purchased by the direct anchor investors. In addition, we may obtain loans from our initial stockholders, officers, directors, or their affiliates. The personal and financial interests of our 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 deadline for completing our initial business combination nears.
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:
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default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations;
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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;
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our immediate payment of all principal and accrued interest, if any, if the debt is payable on demand;
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our inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing while the debt is outstanding;
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our inability to pay dividends on our common stock;
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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, our ability to pay expenses, make capital expenditures and acquisitions, and fund other general corporate purposes;
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limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
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increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation;
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limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, and execution of our strategy; and
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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 warrants, 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.
Of the net proceeds from this offering and the sale of the private placement warrants held in trust, up to $202,000,000 (or $232,300,000 if the underwriters’ over-allotment option is exercised in full) will be available to complete our initial business combination and pay related fees and expenses (which includes up to $7,000,000, or up to $8,050,000 if the underwriters’ over-allotment option is exercised in full, for the payment of deferred underwriting commissions). The underwriters will not receive any underwriting commissions on any units purchased in this offering by certain investors identified by our sponsor.
We may complete 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 complete 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 developments. 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. In addition, we initially intend to focus our search for an initial business combination in a single industry. Accordingly, the prospects for our success may be:
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solely dependent upon the performance of a single business, property or asset; or
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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 developments, 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 acquire several businesses that are owned by different sellers, we will need for each of such sellers to agree that our purchase of 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 acquired companies 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 acquisition strategy, we may seek to complete 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 certificate of incorporation will not provide a specified maximum redemption threshold, except that we will only redeem our public shares so long as (after such redemption) our net tangible assets will be at least $5,000,001 either immediately prior to or upon consummation of our initial business combination and after payment of underwriters’ fees and commissions (such that we do not then become subject to the SEC’s “penny stock” rules). 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 business combination pursuant to the tender offer rules, have entered into privately negotiated agreements to sell their shares to our initial stockholders, officers, directors, advisors or their affiliates. 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, all shares of Class A 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 complete our initial business combination, we may seek to amend our certificate of incorporation or other governing instruments, including our warrant agreement, in a manner that will make it easier for us to complete our initial business combination but that our stockholders or warrant holders may not support.
In order to complete a business combination, blank check companies have, in the recent past, amended various provisions of their charters and 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 certificate of incorporation or other governing instruments, including to extend the time we have to consummate an initial business combination in order to complete our initial business combination.
The provisions of our 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 at least 65% of our outstanding 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 certificate of incorporation and the trust agreement 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 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 sale of the private placement warrants into the trust account and not release such amounts except in specified circumstances, and to provide redemption rights to public stockholders as described herein) may be amended if approved by holders of at least 65% of our outstanding common stock entitled to vote thereon, and corresponding provisions of the trust agreement governing the release of funds from our trust account may be amended if approved by holders of at least 65% of our outstanding common stock entitled to vote thereon; provided that amendments relating to the appointment or removal of directors prior to our initial business combination require a resolution passed by the holders of a majority of shares of our Class B common stock. In all other instances, our certificate of incorporation may be amended by holders of a majority of our outstanding common stock entitled to vote thereon, subject to applicable provisions of the DGCL or applicable stock exchange rules. We may not issue additional securities that would entitle the holders thereof, prior to our initial business combination, to (1) receive funds from the trust account or (2) vote as a class with our public shares (a) on any initial business combination or (b) to approve an amendment to our certificate of incorporation. The restriction on issuing additional securities described in the prior sentence will expire upon consummation of our initial business combination. Our initial stockholders, who will collectively beneficially own at least 20.0% of our common stock upon the closing of this offering, may participate in any vote to amend our 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 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 certificate of incorporation.
Our sponsor, officers, and directors have agreed, pursuant to a letter agreement with us, that they will not propose any amendment to our certificate of incorporation (A) to modify the substance or timing of our
obligation to allow redemption in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination within 18 months from the closing of this offering or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity, unless we provide our public stockholders with the opportunity to redeem their public 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 public shares. 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 sponsor, officers or directors for any breach of these agreements. As a result, in the event of a breach, our public 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 warrants will be sufficient to allow us to complete our initial business combination, because we have not yet selected any 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 warrants 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 repurchase 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 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 only receive approximately $10.10 per share on the liquidation of our trust account, and our warrants will expire worthless. In certain circumstances, our public stockholders may receive less than $10.10 per share on the redemption of their shares. 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 $10.10 per share” and other risk factors in this section.
Our initial stockholders will control the election of our board of directors until consummation of our initial business combination and will exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not support.
Upon the closing of this offering, our initial stockholders will own shares representing 20.0% of our issued and outstanding shares of common stock (assuming they do not purchase any units in this offering). In addition, prior to our initial business combination, holders of our Class B common stock will have the right to appoint all of our directors and may remove members of our board of directors for any reason. Holders of our public shares will have no right to vote on the election of directors during such time. These provisions of our certificate of incorporation may only be amended by a resolution passed by the holders of a majority of shares of our Class B common stock. As a result, you will not have any influence over the election of directors prior to our initial business combination.
If our initial stockholders purchase any units in this offering or if our initial stockholders purchase any additional shares of common stock in the aftermarket or in privately negotiated transactions, this would
increase their control. 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, prior to the completion of our initial business combination, only holders of the Class B common stock have the right to vote on the election of directors and holders of a majority of the outstanding shares of our Class B common stock may remove members of our board of directors for any reason. In addition, our board of directors, whose members were elected by certain of our initial stockholders, is and 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. 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 sponsor, because of its 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.
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 complete our initial business combination.
We will be issuing warrants to purchase 10,000,000 shares of our Class A common stock (or up to 11,500,000 shares of Class A common stock if the underwriters’ over-allotment option is exercised in full) as part of the units offered by this prospectus and, simultaneously with the closing of this offering, we will be issuing private placement warrants to purchase an aggregate of 8,000,000 (or up to 8,900,000 if the underwriters’ over-allotment option is exercised in full) shares of Class A common stock. Our initial stockholders currently own an aggregate of 5,750,000 founder shares. 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 initial stockholders, officers, directors or their affiliates makes any working capital loans, up to $1,500,000 of such loans may be convertible into warrants, at a price of $1.00 per warrant at the option of the lender. The warrants would be identical to the private placement warrants.
To the extent we issue shares of Class A common stock to complete a business combination, the potential for the issuance of a substantial number of additional shares of Class A common stock upon exercise of these warrants and conversion rights could make us a less attractive acquisition vehicle to a target business. Any such issuance will increase the number of issued and outstanding shares of our Class A common stock and reduce the value of the shares of Class A common stock issued to complete the business combination. Therefore, our warrants and founder shares may make it more difficult to complete 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 sponsor, the direct anchor investors or their permitted transferees, (i) they will not be redeemable by us (except as described under “Description of Securities—Redeemable Warrants—Public Stockholders’ Warrants—Redemption of warrants when the price per share of Class A common stock equals or exceeds $10.00”), (ii) 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 until 30 days after the completion of our initial business combination, (iii) they may be exercised by the holders on a cashless basis and (iv) the holders thereof (including with respect to the shares of common stock issuable upon exercise of these warrants) are entitled to registration rights. The private placement warrants will not vote on any amendments to the warrant agreement discussed elsewhere in this prospectus.
Compliance obligations under the Sarbanes-Oxley Act may make it more difficult for us to complete our initial business combination, require substantial financial and management resources, and increase the time and costs of completing an acquisition.
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. 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 acquisition.
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 target historical and/or pro forma financial statement disclosure. 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 we may acquire 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.
A provision of our warrant agreement may make it more difficult for use to consummate an initial business combination.
If:
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we issue additional shares or equity-linked securities for capital raising purposes in connection with the closing of our initial business combination at a Newly Issued Price of less than $9.20 per share, 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 on the date of the consummation of our initial business combination (net of redemptions), and
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the Market Value is below $9.20 per share,
then the exercise price of each warrant will be adjusted such that the effective exercise price per full share will be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00 per-share redemption trigger price described under “Description of Securities—Redeemable Warrants—Public Stockholders’ Warrants—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 higher of the Market Value and the Newly Issued Price, and the $10.00 per-share redemption trigger price described under “Description of Securities—Redeemable Warrants—Public Stockholders’ Warrants—Redemption of warrants when the price per share of Class A common stock equals or exceeds $10.00” will be adjusted (to the nearest cent) to be equal to the higher of the Market Value and the Newly Issued Price. This may make it more difficult for us to consummate an initial business combination with a target business.
If we complete our initial business combination with a company with operations or opportunities outside of the United States, we would be subject to a variety of additional risks that may negatively impact our operations.
If we complete our initial business combination with a company with operations or opportunities outside of the United States, we would be subject to any special considerations or risks associated with companies operating in an international setting, including any of the following:
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higher costs and difficulties inherent in managing cross-border business operations and complying with different commercial and legal requirements of overseas markets;
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rules and regulations regarding currency redemption;
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complex corporate withholding taxes on individuals;
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laws governing the manner in which future business combinations may be effected;
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tariffs and trade barriers;
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regulations related to customs and import/export matters;
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longer payment cycles and challenges in collecting accounts receivable;
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tax issues, such as tax law changes and variations in tax laws as compared to the United States;
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currency fluctuations and exchange controls;
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rates of inflation;
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cultural and language differences;
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employment regulations;
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crime, strikes, riots, civil disturbances, terrorist attacks, natural disasters and wars;
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deterioration of political relations with the United States; and
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government appropriations of assets.
We may not be able to adequately address these additional risks. If we were unable to do so, our operations might suffer, which may adversely impact our results of operations and financial condition.
We may face risks related to businesses in the proprietary network communications technology.
Business combinations with businesses with proprietary network communications technology entail special considerations and risks. If we are successful in completing a business combination with such a target business, we may be subject to, and possibly adversely affected by, the following risks:
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if we do not develop successful new products or improve existing ones, our business will suffer;
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we may invest in new lines of business that could fail to attract or retain users or generate revenue;
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we will face significant competition and if we are not able to maintain or improve our market share, our business could suffer;
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the loss of one or more members of our management team, or our failure to attract and retain other highly qualified personnel in the future, could seriously harm our business;
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if our security is compromised or if our platform is subjected to attacks that frustrate or thwart our users’ ability to access our products and services, our users, advertisers, and partners may cut back on or stop using our products and services altogether, which could seriously harm our business;
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mobile malware, viruses, hacking and phishing attacks, spamming, and improper or illegal use of our products could seriously harm our business and reputation;
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if we are unable to successfully grow our user base and further monetize our products, our business will suffer;
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if we are unable to protect our intellectual property, the value of our brand and other intangible assets may be diminished, and our business may be seriously harmed;
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we may be subject to regulatory investigations and proceedings in the future, which could cause us to incur substantial costs or require us to change our business practices in a way that could seriously harm our business;
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components used in our products may fail as a result of a manufacturing, design, or other defect over which we have no control, and render our devices inoperable;
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an inability to manage rapid change, increasing consumer expectations and growth;
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an inability to build strong brand identity and improve subscriber or customer satisfaction and loyalty;
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an inability to deal with our subscribers’ or customers’ privacy concerns;
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an inability to license or enforce intellectual property rights on which our business may depend;
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an inability by us, or a refusal by third parties, to license content to us upon acceptable terms;
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potential liability for negligence, copyright, or trademark infringement or other claims based on the nature and content of materials that we may distribute;
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competition for the leisure and entertainment time and discretionary spending of subscribers or customers, which may intensify in part due to advances in technology and changes in consumer expectations and behavior; and
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disruption or failure of our networks, systems or technology as a result of computer viruses, “cyber-attacks,” misappropriation of data or other malfeasance, as well as outages, natural disasters, terrorist attacks, accidental releases of information or similar events.
Risks Relating to the Post-Business Combination Company
Subsequent to the completion of our initial business combination, we may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and 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 surface 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 security holders are unlikely to have a remedy for such reduction in value.
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 or acquire shares will own less than 100% of the outstanding 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 business sufficient for the post-transaction company 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 outstanding 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 our 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, or issue a substantial number of new shares to third-parties in connection with financing our initial business combination. In such cases, 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. 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 have a limited ability to assess the management of a prospective target business and, as a result, may complete our initial business combination with a target business whose management may not have the skills, qualifications or abilities to manage a public company, which could, in turn, negatively impact the value of our stockholders’ investment in us.
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 security holders are unlikely to have a remedy for such reduction in value.
The officers and directors of an acquisition candidate may resign upon completion of our initial business combination. The departure of a target business’s key personnel could negatively impact the operations and profitability of our post-combination business. The role of an acquisition 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 an acquisition candidate’s management team will remain associated with the acquisition candidate following our initial business combination, it is possible that members of the management of an acquisition candidate will not wish to remain in place.
Risks Relating to our Management Team
Our ability to successfully complete our initial business combination and to be successful thereafter will be totally dependent upon the efforts of members of our management team, some of whom may join us following our initial business combination. The loss of such people could negatively impact the operations and profitability of our post-combination business.
Our ability to successfully complete our business combination is dependent upon the efforts of members of our management team. The role of members of our management team in the target business, however, cannot presently be ascertained. Although some members of our management team 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.
In addition, the officers and directors of an acquisition candidate may resign upon completion of our initial business combination. The departure of a target business’s key personnel could negatively impact the operations and profitability of our post-combination business. The role of an acquisition 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 an acquisition candidate’s management team will remain associated with the acquisition candidate following our initial business combination, it is possible that members of the management of an acquisition candidate will not wish to remain in place. The loss of key personnel could negatively impact the operations and profitability of our post-combination business.
Members of our management team 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 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.
Members of our management team 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. However, we believe the ability of such individuals to remain with us after the completion of our initial business combination will not be the determining factor in our decision as to whether or not we will proceed with any potential business combination. There is no certainty, however, that any members of our management team will remain with us after the completion of our initial business combination. We cannot assure you that any members of our management team will remain in senior management or advisory positions with us. The determination as to whether any members of our management team will remain with us will be made at the time of our initial business combination.
Our officers and directors may 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.
None of our officers or directors is required to commit his or her 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, including other business endeavors for which he or she may be entitled to substantial compensation. We do not intend to have any full-time employees prior to the completion of our initial business combination. Our independent directors 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—Conflicts of Interest.”
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 allocating their time and 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 or entities. Certain of our officers and directors are, and may in the future become, affiliated with entities (such as operating companies or investment vehicles) that are engaged in a similar business, although our officers and directors (excluding independent directors) may not participate in the formation of, or become an officer or director of any other special purpose acquisition company with a class of securities registered under the Exchange Act which has publicly filed a registration statement with the SEC until we have entered into a definitive agreement regarding our initial business combination or we have failed to complete our initial business combination within 18 months after the closing of this offering or during any Extension Period.
Our officers and directors also may become aware of business opportunities which may be appropriate for presentation to us and the other entities in the future to which they owe certain fiduciary or contractual duties. Accordingly, they may have conflicts of interest in determining to which entity a particular business opportunity should be presented. 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.
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 the sections of this prospectus entitled “Management—Officers and Directors,” “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 initial stockholders, directors or officers, or any of their affiliates although we do not currently intend to do so. We do not 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.
Despite our agreement that, in the event we seek to complete our initial business combination with a company business that is affiliated with our initial stockholders, officers or directors, or any of their affiliates, we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm or another independent entity that commonly renders valuation opinions that our initial business combination is fair to us from a financial point of view, potential conflicts of interest still may exist. As a result, the terms of the business combination may not be as advantageous to our company and our public stockholders as they would be absent any conflicts of interest.
Members of our management team may in the future be involved in governmental investigations and civil litigation relating to the business affairs of companies with which they are, were, or may in the future be, affiliated. This may negatively affect our ability to consummate an initial business combination.
Members of our management team may in the future be involved in governmental investigations and civil litigation relating to the business affairs of companies with which they are, were or may in the future be affiliated with. Any such investigations or litigations may divert our management team’s attention and resources away from searching for an initial business combination, may be detrimental to our reputation, and thus may negatively affect our ability to complete an initial business combination.
Risks Relating to 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 earliest to occur of: (a) 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, (b) the redemption of any public shares properly submitted in connection with a stockholder vote to amend our certificate of incorporation (i) to modify the substance or timing of our obligation to allow redemption in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination within 18 months from the closing of this offering or (ii) with respect to any other provisions relating to stockholders’ rights or pre-initial business combination activity and (c) the redemption of our public shares if we have not completed our initial business combination within 18 months from the closing of this offering, subject to applicable law. Stockholders who do not exercise their rights to the funds in connection with an amendment to our certificate of incorporation would still have rights to the funds in connection with a subsequent business combination within the allocated time period 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 the end of such period 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.
If our securities are approved for listing, 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.
We have been approved to list our units on Nasdaq on or promptly after the date of this prospectus and our Class A common stock and warrants on or promptly after their date of separation. Although after giving effect to this offering we expect to meet, on a pro forma basis, 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 the NYSE 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 of 300 public 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 $4.00 per share, our stockholders’ equity would generally be required to be at least $5 million and we would be required to have a minimum of 300 round lot holders of our unrestricted securities (with at least 50% of such round-lot holders holding
unrestricted 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 our 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:
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a limited availability of market quotations for our securities;
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reduced liquidity for our securities;
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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;
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a limited amount of news and analyst coverage; and
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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 covered 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.
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 that as soon as practicable, but in no event later than 20 business days after the closing of our initial business combination, we will use our commercially reasonable efforts to file, and within 60 business days following our initial business combination to have declared effective, a registration statement covering the issuance of the shares of Class A common stock issuable upon exercise of the warrants. We will use our commercially reasonable efforts to maintain the effectiveness of such registration statement and a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed. 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. 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 be required to use our commercially reasonable 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. 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. There may be a circumstance where an exemption from registration exists for holders of our private placement warrants to exercise their warrants while a corresponding exemption does not exist for holders of the public warrants included as part of units sold in this offering. In such an instance, the initial purchasers and their permitted transferees (which may include our directors and officers) would be able to exercise their warrants and sell the common stock underlying their warrants while holders of our public warrants would not be able to exercise their warrants and sell the underlying common stock. 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. As a result, we may redeem the warrants as set forth above even if the holders are otherwise unable to exercise their warrants.
Our initial stockholders contributed approximately $0.004 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 Class A 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 91.8% (or $9.18 per share, assuming no exercise of the underwriters’ over-allotment option), the difference between the pro forma net tangible book value per share of $0.82 and the initial offering price of $10.00 per unit. In addition, because of the anti-dilution rights of 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 50% of the then-outstanding public warrants. As a result, the exercise price of your warrants could be increased, 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 mistake or defective provision, but requires the approval by the holders of at least 50% of the then outstanding public warrants to make any change that adversely affects the interests of the registered holders of public warrants and, solely with respect to any amendment to the terms of the private placement warrants or any provision of the warrant agreement with respect to the private placement warrants, 50% of the number of the then-outstanding private placement warrants. Accordingly, we may
amend the terms of the public warrants in a manner adverse to a holder if holders of at least 50% 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 50% 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 Class A 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 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 and provided certain other conditions are met. 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. As a result, we may redeem the public warrants as set forth above even if the holders are otherwise unable to exercise the warrants. Redemption of the outstanding warrants could force you (i) to exercise your warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) to sell your warrants at the then-current market price when you might otherwise wish to hold your warrants or (iii) to accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, we expect would be substantially less than the market value of your warrants. None of the private placement warrants will be redeemable by us (except as set forth under “Description of Securities—Redeemable Warrants—Public Stockholders’ Warrants—Redemption of warrants when the price per share of Class A common stock equals or exceeds $10.00”) so long as they are held by our sponsor, the direct anchor investors or their permitted transferees.
In addition, unlike many other similarly structured blank check companies, we have the ability to redeem outstanding warrants 90 days after they become exercisable for $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their warrants prior to redemption for a number of Class A common stock determined based on the redemption date and the fair market value of our Class A common stock and provided certain other conditions are met. Please see “Description of Securities—Redeemable Warrants—Public Stockholders’ Warrants—Redemption of warrants when the price per share of Class A common stock equals or exceeds $10.00.” 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 fair market value to the warrant holders. We can also redeem the warrants for common stock 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 fair market value in the form 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 the Class A common stock trades at a price higher than the exercise price of $11.50. Any such redemption may have similar consequences to the redemption described in the above paragraph. In addition, such redemption may occur at a time when the warrants are “out-of-the-money,” in which case you would lose any potential embedded value from a subsequent increase in the value of the Class A common stock had your warrants remained outstanding. Finally, this redemption feature provides a ceiling to the value of your warrants since it locks in the redemption price in the number of Class A common stock to be received if we choose to redeem the warrants for common stock.
Because each unit contains one-half of one redeemable 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-half of one warrant. Because, pursuant to the warrant agreement, the warrants may only be exercised for a whole number of shares, only a whole warrant may be exercised at any given
time. This is different from other offerings similar to ours whose units include one share of common stock and one whole warrant to purchase 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-half 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.
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 the underwriters 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;
➢
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.
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, including as a result of the COVID-19 outbreak and other events (such as terrorist attacks, natural disasters or a significant outbreak of other infectious diseases). 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 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 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 and the fact that prior to the completion of our initial business combination only holders of our shares of Class B common stock, which are held by our initial stockholders, are entitled to vote on the election of directors and holders of a majority of the outstanding shares of our Class B common stock may remove members of our board of directors for any reason, each of which may make the removal of management more difficult 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 the removal of management more difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
General Risk Factors
We are a newly formed 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 newly 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 with our company and may be unable to complete our initial business combination. If we fail to complete our business combination, we will never generate any operating revenues.
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 auditor 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 an 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 end of that year’s second fiscal quarter, 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 end of that year’s second fiscal quarter. 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.
Past performance by our management team and their respective affiliates may not be indicative of future performance of an investment in us.
Information regarding performance by, or businesses associated with, our management team and their respective affiliates is presented for informational purposes only. Past performance by our management team and their respective affiliates is not a guarantee either (i) that we will be able to locate a suitable candidate for our initial business combination or (ii) of success with respect to any business combination we may consummate. Our officers and directors have not had management experience with special purpose acquisition corporations in the past. You should not rely on the historical performance of our management team and their respective affiliates as an indication of the future performance of an investment in our company or the returns we will, or are likely to, generate going forward. In addition, an investment in our company is not an investment in any other entities affiliated with our management team. Furthermore, our sponsor is a newly formed entity formed for the sole purpose of holding securities of our company with no operational or historical record.
Since only holders of our founder shares will have the right to vote on the appointment of directors, upon the listing of our shares on Nasdaq, Nasdaq may consider us to be a “controlled company” within the meaning of Nasdaq listing rules and, as a result, we may qualify for exemptions from certain corporate governance requirements.
After completion of this offering, only holders of our founder shares will have the right to vote on the appointment of directors. As a result, Nasdaq may consider us to be a “controlled company” within the meaning of Nasdaq corporate governance standards. Under Nasdaq corporate governance standards, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements, including the requirements that:
•
we have a board that includes a majority of “independent directors,” as defined under Nasdaq listing rules;
•
we have independent director oversight of executive officer compensation as outlined under Nasdaq listing rules; and
•
we have independent director oversight of director nominations.
We do not intend to utilize these exemptions and intend to comply with the corporate governance requirements of Nasdaq, subject to applicable phase-in rules. However, if we determine in the future to
utilize some or all of these exemptions, you will not have the same protections afforded to shareholders of companies that are subject to all Nasdaq corporate governance requirements.
Our certificate of incorporation will require, to the fullest extent permitted by law, that derivative actions brought in our name, actions against our directors, officers, other employees or stockholders 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, which may have the effect of discouraging lawsuits against our directors, officers, other employees or stockholders.
Our certificate of incorporation will require, to the fullest extent permitted by law, that derivative actions brought in our name, actions against our directors, officers and employees for breach of fiduciary duty and certain other actions may be brought only in the Court of Chancery in the State of Delaware, except any action (A) as to which the Court of Chancery in the State of Delaware determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), (B) which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery or (C) for which the Court of Chancery does not have subject matter jurisdiction. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and consented to the forum provisions in our certificate of incorporation.
This choice of forum provision may make it more costly, or limit a stockholder’s ability, to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers or employees, which may discourage lawsuits with respect to such claims. We cannot be certain that a court will decide that this provision is either applicable or enforceable, and if a court were to find the choice of forum provision contained in our certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.
Our certificate of incorporation will provide that the exclusive forum provision will be applicable to the fullest extent permitted by applicable law, subject to certain exceptions. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. As a result, the exclusive forum provision will not apply to suits brought to enforce any duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. In addition, the exclusive forum provision will not apply to actions brought under the Securities Act, or the rules and regulations thereunder.
By purchasing or otherwise acquiring any interest in shares of our capital stock and thereby consenting to the forum provisions in our certificate of incorporation, investors will not be deemed to have waived the Company’s compliance with the federal securities law and the rules and regulations thereunder.
Any of the foregoing could have an adverse impact on our operations following a business combination. However, our efforts in identifying prospective target businesses will not be limited to businesses with proprietary network communications technology. Accordingly, if we acquire a target business in another industry, these risks we will be subject to risks attendant with the specific industry in which we operate or target business which we acquire, which may or may not be different than those risks listed above.
Use of Proceeds
We are offering 20,000,000 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 warrants will be used as set forth in the following table.
| |
|
|
Without
Over-Allotment
Option
|
|
|
Over-Allotment
Option Fully
Exercised
|
|
|
Gross proceeds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross proceeds from units offered to public
|
|
|
|
$ |
200,000,000 |
|
|
|
|
$ |
230,000,000 |
|
|
|
Gross proceeds from private placement warrants offered in the
private placement
|
|
|
|
|
8,000,000 |
|
|
|
|
|
8,900,000 |
|
|
|
Total gross proceeds
|
|
|
|
$ |
208,000,000 |
|
|
|
|
$ |
238,900,000 |
|
|
|
Estimated offering expenses(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting commissions (2% of gross proceeds from units offered to public, excluding deferred portion)(2)
|
|
|
|
$ |
4,000,000 |
|
|
|
|
$ |
4,600,000 |
|
|
|
Legal fees and expenses
|
|
|
|
|
300,000 |
|
|
|
|
|
300,000 |
|
|
|
Accounting fees and expenses
|
|
|
|
|
40,000 |
|
|
|
|
|
40,000 |
|
|
|
SEC Expenses
|
|
|
|
|
29,854 |
|
|
|
|
|
29,845 |
|
|
|
FINRA expenses
|
|
|
|
|
35,000 |
|
|
|
|
|
35,000 |
|
|
|
Travel and road show
|
|
|
|
|
20,000 |
|
|
|
|
|
20,000 |
|
|
|
Stock Exchange listing and filing fees
|
|
|
|
|
75,000 |
|
|
|
|
|
75,000 |
|
|
|
Director and Officer liability insurance premiums(3)
|
|
|
|
|
155,000 |
|
|
|
|
|
155,000 |
|
|
|
Printing and engraving expenses
|
|
|
|
|
30,000 |
|
|
|
|
|
30,000 |
|
|
|
Miscellaneous
|
|
|
|
|
65,146 |
|
|
|
|
|
65,146 |
|
|
|
Total estimated offering expenses (excluding underwriting commissions)
|
|
|
|
$ |
750,000 |
|
|
|
|
$ |
750,000 |
|
|
|
Proceeds after estimated offering expenses
|
|
|
|
$ |
203,250,000 |
|
|
|
|
$ |
233,550,000 |
|
|
|
Held in trust account
|
|
|
|
$ |
202,000,000 |
|
|
|
|
$ |
232,300,000 |
|
|
|
% of public offering size
|
|
|
|
|
101% |
|
|
|
|
|
101% |
|
|
|
Not held in trust account(4)
|
|
|
|
$ |
1,250,000 |
|
|
|
|
$ |
1,250,000 |
|
|
| |
The following table shows the use of the approximately $1,250,000 of net proceeds not held in the trust account.(5)
| |
|
|
Amount
|
|
|
% of Total
|
|
|
Legal, accounting, due diligence, travel, and other expenses in
connection with any business combination
|
|
|
|
$ |
360,000 |
|
|
|
28.8%
|
|
|
Legal and accounting fees related to regulatory reporting obligations
|
|
|
|
|
150,000 |
|
|
|
12.0%
|
|
|
Payment for office space, administrative and support services
|
|
|
|
|
360,000 |
|
|
|
38.4%
|
|
|
Consulting, travel and miscellaneous expenses incurred during
search for a target business
|
|
|
|
|
75,000 |
|
|
|
6.0%
|
|
|
Working capital to cover miscellaneous expenses (including stock exchange continued listing fees and director and officer liability insurance premiums) and reserves
|
|
|
|
|
305,000 |
|
|
|
14.8%
|
|
|
Total
|
|
|
|
$ |
1,250,000 |
|
|
|
100.0%
|
|
(1)
A portion of the offering expenses will be paid from the proceeds of a loan from KINS Capital LLC of up to $300,000 as described in this prospectus. This amount will be repaid upon completion of this offering out of the $750,000 of offering proceeds that has been allocated for the payment of offering expenses (other than underwriting commissions) and amounts not to be held in the trust account. In the event that offering expenses are less than set forth in this table, any such amounts will be used for post-closing working capital expenses. These expenses are estimates only. 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.
(2)
The underwriters have agreed to defer underwriting commissions equal to 3.5% of the gross proceeds of this offering. Upon completion of our initial business combination, up to $7,000,000, which constitutes the underwriters’ deferred commissions (or up to $8,050,000 if the underwriters’ over-allotment option is exercised in full) will be paid to the underwriters from the funds held in the trust account, and the remaining funds, less amounts released to the trustee to pay redeeming stockholders, will be released to us and can be used to pay all or a portion of the purchase price of the business or businesses with which our initial business combination occurs or for general corporate purposes, including payment of principal or interest on indebtedness incurred in connection with our initial business combination, to fund the purchases of other companies or for working capital. Certain investors identified by our sponsor may purchase units in this offering at the initial public offering price. The underwriters will not receive any underwriting discounts or commissions on the units purchased by such investors. The underwriters will not be entitled to any interest accrued on the deferred underwriting discounts and commissions.
(3)
This amount represents the approximate amount of annual director and officer liability insurance premiums we anticipate paying following the completion of this offering and until we complete our initial business combination.
(4)
The amount not held in the trust account will increase proportionally with the amount of underwriting discounts and commissions not paid to the underwriters in the event certain investors identified by the sponsor purchase units in this offering at the initial public offering price.
(5)
These expenses are estimates only. To the extent that certain investors identified by the sponsor purchase units in this offering at the initial public offering price, the working capital amounts reflected below will increase proportionally with the amount of underwriting discounts and commissions that are not paid to the underwriters. Additionally, 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 our initial business combination based upon the level of complexity of such business combination. In the event we identify a target business 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.
Nasdaq listing rules provide that at least 90% of the gross proceeds from this offering and the sale of the private placement warrants be deposited in a trust account. Of the net proceeds of this offering and the sale of the private placement warrants, $202,000,000 (or $232,300,000 if the underwriters’ over-allotment option is exercised in full), including up to $7,000,000 (or up to $8,050,000 if the underwriters’ over-allotment option is exercised in full) of deferred underwriting commissions, will be placed in a U.S.-based trust account, with Continental Stock Transfer & Trust Company acting as trustee, and will be held as cash or 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 which invest only in direct U.S. government treasury obligations. We estimate that the interest earned on the trust account will be approximately $202,000 per year, assuming an interest rate of 0.1% per year; however, we can provide no assurance regarding this amount. Except with respect
to interest earned on the funds held in the trust account that may be released to us to pay our tax obligations, the proceeds from this offering and the sale of the private placement warrants held in the trust account will not be released from the trust account until the earliest to occur of: (a) the completion of our initial business combination, (b) the redemption of any public shares properly submitted in connection with a stockholder vote to amend certain provisions of our certificate of incorporation as described herein and (c) the redemption of our public shares if we have not completed our business combination within 18 months from the closing of this offering, subject to applicable law. Stockholders who do not exercise their rights to the funds in connection with an amendment to our certificate of incorporation would still have rights to the funds in connection with a subsequent business combination.
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, 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 from the trust account for general corporate purposes, including for maintenance or expansion of operations of the post-transaction company, the payment of principal or interest due on indebtedness incurred in completing our initial business combination, to fund the purchase of other assets, companies or for working capital.
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 acquisition, 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 initial stockholders, members of our management team or their affiliates, but such persons are not under any obligation to advance funds to, or invest in, us.
We will enter into an Administrative Services Agreement pursuant to which we will pay our sponsor a total of $20,000 per month for office space, 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. This loan is non-interest bearing, unsecured and is due at the earliest of December 31, 2020, the closing of this offering and our determination to not proceed with this offering. The loan will be repaid upon the closing of this offering out of the offering proceeds not held in the trust account. As of September 30, 2020, there was $69,854 outstanding under the note.
In addition, in order to fund working capital deficiencies or finance transaction costs in connection with an intended initial business combination, our initial stockholders, officers, directors, or their affiliates may, but are not obligated to, loan us funds as may be required. If we complete our initial business combination, we may 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. In the event that our initial business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from our trust account would be used to repay such loaned amounts. Up to $1,500,000 of such loans may be convertible into warrants, at a price of $1.00 per warrant at the option of the lender. The warrants would be identical to the private placement warrants. Except as described above, the terms of such loans, if any, have not been determined and no written agreements exist with respect to such loans. Prior to the completion of our initial business combination, we do not expect to seek loans from parties other than our initial stockholders, officers, directors, 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 initial stockholders, directors, officers, advisors or their affiliates may purchase public 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. There is no limit on the number of our securities that may be purchased, subject to compliance with applicable law and Nasdaq listing rules. 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. If they engage in such transactions, they will be subject to restrictions in making any such purchases when they are in possession of any material non-public information 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 be required to comply with such rules.
Our direct anchor investors have expressed to us an interest to purchase units in this offering and we have agreed to direct the underwriters to sell such units to our direct anchor investors. There can be no assurance that our direct anchor investors will acquire any units in this offering or what amount of equity our anchor investors will retain, if any, upon the consummation of our initial business combination. In the event that such direct anchor investors purchase such units (either in this offering or after) and vote them in favor of our initial business combination, it is possible that no votes from other public stockholders would be required to approve our initial business combination, depending on the number of shares that are present at the meeting to approve such transaction. As a result of the founder shares and private placement warrants that our direct anchor investors may hold (directly or indirectly), they may have different interests with respect to a vote on an initial business combination than other public stockholders. Our direct anchor investors will have the same rights to the funds held in the trust account with respect to the common stock underlying the units they may purchase in this offering as the rights afforded to our public stockholders.
We will only redeem our public shares so long as (after such redemption) our net tangible assets will be at least $5,000,001 either immediately prior to or upon consummation of our initial business combination (so that we do not then become subject to the SEC’s “penny stock” rules) and the agreement for our 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 earliest to occur of: (a) the completion of our initial business combination and then, only in connection with those public shares that such stockholder has properly elected to redeem, subject to the limitations described in this prospectus, (b) the redemption of any public shares properly submitted in connection with a stockholder vote to amend certain provisions of our certificate of incorporation as described herein and (c) the redemption of our public shares if we have not completed our business combination within 18 months from the closing of this offering, subject to applicable law. Stockholders who do not exercise their rights to the funds in connection with an amendment to our certificate of incorporation would still have rights to the funds in connection with a subsequent business combination. In no other circumstances will a public stockholder have any right or interest of any kind to or in the trust account. Holders of warrants will not have any rights of proceeds held in the trust account with respect to the warrants.
Our sponsor, officers and directors have entered into a letter agreement with us pursuant to which they have agreed to waive (i) their redemption rights with respect to any founder shares and any public shares held by them in connection with the completion of our initial business combination and (ii) their redemption rights with respect to any founder shares and any public shares held by them in connection with a stockholder vote to approve an amendment to our certificate of incorporation (A) to modify the
substance or timing of our obligation to allow redemption in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination within 18 months from the closing of this offering or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity. In addition, our sponsor, officers and directors have agreed to waive their rights to liquidating distributions from the trust account with respect to any founder shares held by them if we fail to complete our business combination within the prescribed time frame. However, if our sponsor, or any of our officers, directors or affiliates 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. Permitted transferees of the founder shares held by our sponsor, officers and directors will be subject to the same restrictions applicable to our sponsor, officers and directors, respectively.
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, except if we increase the size of this offering, in which case we will effect a stock dividend or other appropriate mechanism with respect to our Class B common stock immediately prior to the consummation of this offering in an amount as to maintain the number of founder shares at 20% of our issued and outstanding shares of common stock upon the consummation of this offering. 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 warrants, and the pro forma net tangible book value per share of our 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 September 30, 2020, our net tangible book deficit was $350,959, which excludes $2,717 received subsequently from the direct anchor investors, or approximately $(0.06) per share of common stock. After giving effect to the sale of 20,000,000 shares of Class A common stock included in the units we are offering by this prospectus, the sale of the private placement warrants and the deduction of underwriting commissions and estimated expenses of this offering, our pro forma net tangible book value at September 30, 2020 would have been $5,000,008, or approximately $0.82 per share, representing an immediate increase in net tangible book value (as decreased by the value of 18,938,288 shares of Class A common stock that may be redeemed for cash and assuming no exercise of the underwriters’ over-allotment option) of $0.88 per share to our initial stockholders as of the date of this prospectus and an immediate dilution of $9.18 per share or 91.8% to our public stockholders. The dilution to new investors if the underwriters exercise the over-allotment option in full would be an immediate dilution of $9.28 per share or 9.28%.
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 (assuming no exercise and full exercise of the underwriters’ over-allotment option):
| |
|
|
Without
Over-allotment
|
|
|
With
Over-allotment
|
|
|
Public offering price
|
|
|
|
|
|
$10.00
|
|
|
|
|
|
$10.00
|
|
|
Net tangible book deficit before this offering
|
|
|
(0.06)
|
|
|
|
|
|
(0.06)
|
|
|
|
|
|
Increase attributable to public stockholders
|
|
|
0.88
|
|
|
|
|
|
0.78
|
|
|
|
|
|
Pro forma net tangible book value after this offering and the sale of the private placement warrants
|
|
|
|
|
|
0.82
|
|
|
|
|
|
0.72
|
|
|
Dilution to public stockholders
|
|
|
|
|
|
$9.18
|
|
|
|
|
|
$
9.28
|
|
|
Percentage of dilution to public stockholders
|
|
|
|
|
|
91.8%
|
|
|
|
|
|
9.28%
|
|
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 $191,276,709 because holders of up to approximately 94.7% 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, calculated as of two business days prior to our initial business combination, including interest earned on the funds held in the trust account and not previously released to us to pay our taxes, divided by the number of shares of Class A common stock sold in this offering. The actual amount of shares that can be redeemed may exceed this amount so long as we satisfy the minimum net tangible asset threshold of at least $5,000,001 immediately prior to or upon consummation of our initial business combination.
The following table sets forth information with respect to our initial stockholders and the public stockholders:
| |
|
|
Shares Purchased
|
|
|
Total Consideration
|
|
|
Average
Price
|
|
| |
|
|
Number
|
|
|
Percentage
|
|
|
Amount
|
|
|
Percentage
|
|
|
Per Share
|
|
|
Initial stockholders(1)
|
|
|
|
|
5,000,000 |
|
|
|
|
|
20.0% |
|
|
|
|
$ |
27,717 |
|
|
|
|
|
0.01% |
|
|
|
|
$ |
0.005 |
|
|
|
Public Stockholders
|
|
|
|
|
20,000,000 |
|
|
|
|
|
80.0% |
|
|
|
|
|
200,000,000 |
|
|
|
|
|
99.99% |
|
|
|
|
$ |
10.00 |
|
|
| |
|
|
|
|
25,000,000 |
|
|
|
|
|
100.0% |
|
|
|
|
$ |
200,027,717 |
|
|
|
|
|
100.00% |
|
|
|
|
|
|
|
|
(1)
Assumes no exercise of the underwriters’ over-allotment option and the corresponding forfeiture of an aggregate of 750,000 shares of Class B common stock held by our initial stockholders.
The pro forma net tangible book value per share after the offering is calculated as follows (assuming no exercise and full exercise of the underwriters’ over-allotment option):
|
Numerator:
|
|
|
Without
Over-allotment
|
|
|
With
Over-allotment
|
|
|
Net tangible book deficit before this offering(1)
|
|
|
$
(348,242)
|
|
|
$
(348,242)
|
|
|
Net proceeds from this offering and sale of the private placement
warrants
|
|
|
203,250,000
|
|
|
233,550,000
|
|
|
Plus: Offering costs accrued for or paid in advance, excluded from tangible book value
|
|
|
374,959
|
|
|
374,929
|
|
|
Less: Deferred underwriting commissions
|
|
|
(7,000,000)
|
|
|
(8,050,000)
|
|
|
Less: Proceeds held in trust subject to redemption
|
|
|
(191,276,709)
|
|
|
(220,526,713)
|
|
| |
|
|
$
5,000,008
|
|
|
$
5,000,004
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
Common stock outstanding prior to this offering
|
|
|
5,750,000
|
|
|
5,750,000
|
|
|
Common stock forfeited if over-allotment is not exercised
|
|
|
(750,000)
|
|
|
—
|
|
|
Common stock included in the units offered
|
|
|
20,000,000
|
|
|
23,000,000
|
|
|
Less: Common stock subject to redemption
|
|
|
(18,938,288)
|
|
|
(21,834,328)
|
|
| |
|
|
6,061,712
|
|
|
6,697,329
|
|
(1)
Includes approximately $2,717 in proceeds from the issuance of 625,000 founder shares to the direct anchor investors in October 2020.
Capitalization
The following table sets forth our capitalization at September 30, 2020, and as adjusted to give effect to the sale of our units and the private placement warrants and the application of the estimated net proceeds derived from the sale of such securities:
| |
|
|
September 30, 2020
|
|
| |
|
|
Actual
|
|
|
As
Adjusted(1)
|
|
|
Note payable—related party(2)
|
|
|
$
69,854
|
|
|
$—
|
|
|
Deferred underwriting commissions
|
|
|
—
|
|
|
7,000,000
|
|
|
Class A common stock, $0.0001 par value, 200,000,000 shares authorized; -0- and 18,938,288 shares subject to possible redemption, actual and as adjusted, respectively
|
|
|
—
|
|
|
191,276,709
|
|
|
Preferred stock, $0.0001 par value; 2,000,000 shares authorized; none issued and outstanding, actual and as adjusted
|
|
|
—
|
|
|
—
|
|
|
Class A common stock, $0.0001 par value, 200,000,000 shares authorized; -0- and 1,061,712 shares issued and outstanding (excluding -0- and 18,938,288 shares subject to possible redemption), actual and as adjusted, respectively(3)
|
|
|
—
|
|
|
107
|
|
|
Class B common stock, $0.0001 par value, 20,000,000 shares authorized; actual and as adjusted; 5,750,000 and 5,000,000 shares issued and outstanding, actual and
as adjusted, respectively(1)
|
|
|
575
|
|
|
500
|
|
|
Additional paid-in capital(5)
|
|
|
24,425
|
|
|
5,000,400
|
|
|
Accumulated deficit
|
|
|
(1,000)
|
|
|
(1,000)
|
|
|
Total stockholders’ equity
|
|
|
$24,000
|
|
|
$5,000,010
|
|
|
Total capitalization
|
|
|
$24,000
|
|
|
$201,276,717
|
|
(1)
Assumes the underwriters’ over-allotment option has not been exercised and the resulting forfeiture of 750,000 founder shares held by our sponsor has occurred.
(2)
Our sponsor has agreed to loan as up to $300,000 to be used for a portion of the expenses of this offering. As of September 30, 2020, we had borrowed $69,854 under the promissory note with our sponsor.
(3)
Upon the completion of our initial business combination, 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, calculated 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 taxes, subject to the limitations described herein whereby our net tangible assets will be maintained at a minimum of $5,000,001 immediately prior to or upon completion of our initial business combination and any limitations (including, but not limited to, cash requirements) created by the terms of the proposed business combination. The number of shares that may be redeemed may exceed this number so long as it would not cause our net tangible assets to be less than $5,000,001 either immediately prior to or upon consummation of our initial business combination.
(4)
Actual share amount is prior to any forfeiture of founder shares by our initial stockholders and as adjusted amount assumes no exercise of the underwriters’ over-allotment option.
(5)
The as adjusted includes approximately $2,717 in proceeds from the issuance of 625,000 founder shares to the direct anchor investors in October 2020.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
We are a blank check company incorporated as a Delaware corporation and formed for the purpose of effecting an initial business combination with a target business. We have not selected any specific target business and we have not, nor has anyone on our behalf, initiated any substantive discussions directly or indirectly, with any target business regarding a business combination with our company. We intend to complete our initial business combination using cash from the proceeds of this offering and the sale of the private placement warrants, our capital stock, debt or a combination of cash, stock 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 Class B common stock resulted in the issuance of Class A shares on a greater than one-to-one basis upon conversion of the Class B common stock;
➢
may subordinate the rights of holders of our 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 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;
➢
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;
➢
may adversely affect prevailing market prices for our units, Class A common stock and/or warrants; and
➢
may not result in adjustment to the exercise price of our warrants.
Similarly, if we issue debt securities or otherwise incur significant debt to bank or other lenders or owners of a target, 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 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, our ability to pay expenses, make capital expenditures and acquisitions, and fund 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;
➢
limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, and 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, at September 30, 2020, we had deferred offering costs of $374,959. Further, we expect to continue to incur significant costs in the pursuit of our acquisition 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 (at the earliest). 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 a capital contribution from our sponsor of $25,000 and, subsequent to September 30, 2020, the direct anchor investors, of an aggregate of approximately $2,717 for the founder shares and a loan to us of up to $300,000 by our sponsor under an unsecured promissory note. Further, we have incurred and expect to continue to incur significant costs in pursuit of our financing and acquisition plans. Management’s plans to address this uncertainty through this offering are discussed above. We cannot assure you that our plans to raise capital or to complete an initial business combination will be successful.
We estimate that the net proceeds from (i) the sale of the units in this offering, after deducting offering expenses of approximately $750,000, underwriting commissions of $4,000,000 ($4,600,000 if the underwriters’ over-allotment option is exercised in full) (excluding deferred underwriting commissions of up to $7,000,000 (or up to $8,050,000 if the underwriters’ over-allotment option is exercised in full)), and (ii) the sale of the private placement warrants for a purchase price of $8,000,000 (or $8,900,000 if the underwriters’ over-allotment option is exercised in full), will be $203,250,000 (or $233,550,000 if the underwriters’ over-allotment option is exercised in full). Of this amount, $202,000,000 (or $232,300,000 if the underwriters’ over-allotment option is exercised in full) will be held in the trust account, which includes up to $7,000,000 (or up to $8,050,000 if the underwriters’ over-allotment option is exercised in full) of deferred underwriting commissions. The underwriters will not receive any underwriting commissions on any units purchased in this offering by certain investors identified by our sponsor. The remaining approximately $1,250,000 will not be held in the trust account (the amount of such proceeds to increase proportionally with the amount of underwriting discounts and commissions not paid to the underwriters in the event certain investors identified by the sponsor purchase units in this offering at the initial public offering price). In the event that our offering expenses exceed our estimate of $750,000, 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 $750,000, 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 (less amounts released to us for taxes payable and deferred underwriting commissions) to complete our initial business combination. We may withdraw interest to pay taxes. We estimate our annual franchise tax obligations, based on the number of shares of our common stock authorized and outstanding after the completion of this offering, to be $200,000, which is the maximum amount of annual franchise taxes payable by us as a Delaware corporation per annum. Our annual income tax obligations will depend on the amount of interest and other income earned on the amounts held in the trust account. To the extent that our capital stock 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 acquisitions and pursue our growth strategies.
Prior to the completion of our initial business combination, we will have available to us the approximately $1,250,000 of proceeds held outside the trust account (the amount of such proceeds to increase proportionally with the amount of underwriting discounts and commissions not paid to the underwriters in the event certain investors identified by the sponsor purchase units in this offering at the initial public offering price). 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, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a business combination.
We expect our primary liquidity requirements during that period to include approximately $360,000 for legal, accounting, due diligence, travel and other expenses in connection with any business combination; $150,000 for legal and accounting fees related to regulatory reporting requirements; $75,000 for consulting, travel and miscellaneous expenses incurred during the search for a target business; $360,000 for payment of service and administrative fees to our sponsor, of $20,000 per month for up to 18 months, and approximately $185,000 for working capital that will be used for miscellaneous expenses and reserves. These amounts are estimates and may differ materially from our actual expenses.
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 business combination. Moreover, we may need to obtain additional financing either to complete our business combination or because we become obligated to redeem a significant number of our public shares upon completion of our business combination, in which case we may issue additional securities or incur debt in connection with such business combination, which may include a specified future issuance. 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 addition, following our initial business combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.
In order to fund working capital deficiencies or finance transaction costs in connection with an intended initial business combination, our initial stockholders, officers, directors, or their affiliates may, but are not obligated to, loan us funds as may be required. If we complete our initial business combination, we may repay such loaned amounts out of the proceeds of the trust account released to us. In the event that our initial business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from our trust account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into warrants, at a price of $1.00 per warrant at the option of the lender. The warrants would be identical to the private placement warrants. Prior to the completion of our initial business combination, we do not expect to seek loans from parties other than our initial stockholders, officers, directors, 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.
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 reporting 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 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 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 auditors 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 auditors to audit and render an opinion on such report when required by Section 404 of the Sarbanes-Oxley Act. The independent auditors 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 warrants 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
In July 2020, we issued an aggregate of 5,750,000 founder shares in exchange for a capital contribution of $25,000. In October 2020, our sponsor forfeited 625,000 founder shares and the direct anchor investors purchased 625,000 founder shares for an aggregate purchase price of approximately $2,717, or approximately $0.004 per share. Prior to this initial investment, we had no assets, tangible or intangible. Up to an aggregate of 750,000 founder shares are subject to forfeiture by our sponsor depending on the extent to which the underwriters’ over-allotment option is exercised. The number of founder shares issued was determined based on the expectation that such founder shares would represent 20% of the outstanding shares upon completion of this offering. The per share purchase price of the founder shares was determined by dividing the amount of cash contributed to the company by the aggregate number of founder shares issued. If we increase or decrease the size of this offering, we will effect a stock dividend or a share contribution back to capital or other appropriate mechanism, as applicable, with respect to our Class B common stock immediately prior to the consummation of this offering in such amount as to maintain the number of founder shares at 20% of the issued and outstanding shares of our common stock upon the consummation of this offering.
Certain investors identified by our sponsor may purchase units in this offering at the initial public offering price. The underwriters will not receive any underwriting discounts or commissions on the units purchased by such investors.
We will enter into an Administrative Services Agreement pursuant to which we will also pay our sponsor a total of $20,000 per month for office space, administrative and support services. Upon completion of our initial business combination or our liquidation, we will cease paying these monthly fees.
Our sponsor, 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 by us to our initial stockholders, officers, directors or our or 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. This loan is non-interest bearing, unsecured and is due at the earliest of December 31, 2020, the closing of this offering and our determination to not proceed with the offering. The loan will be repaid upon the closing of this offering out of the offering proceeds not held in the trust account. As of September 30, 2020, there was $69,854 outstanding under the note.
In addition, in order to fund working capital deficiencies or finance transaction costs in connection with an intended initial business combination, our initial stockholders, officers or directors, may, but are not obligated to, loan us funds as may be required. If we complete our initial business combination, we may 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. In the event that our initial business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from our trust account would be used to repay such loaned amounts. Up to $1,500,000 of such loans may be convertible into warrants, at a price of $1.00 per warrant at the option of the lender. The warrants would be identical to the private placement warrants. Except as described above, the terms of such loans, if any, have not been determined and no written agreements exist with respect to such loans. Prior to the completion of our initial business combination, we do not expect to seek loans from parties other than our initial stockholders, officers and directors, 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 direct anchor investors have expressed to us an interest to purchase units in this offering and we have agreed to direct the underwriters to sell such units to our direct anchor investors. There can be no
assurance that our direct anchor investors will acquire any units in this offering or what amount of equity our anchor investors will retain, if any, upon the consummation of our initial business combination. In the event that such direct anchor investors purchase such units (either in this offering or after) and vote them in favor of our initial business combination, it is possible that no votes from other public stockholders would be required to approve our initial business combination, depending on the number of shares that are present at the meeting to approve such transaction. As a result of the founder shares and private placement warrants that our direct anchor investors may hold (directly or indirectly), they may have different interests with respect to a vote on an initial business combination than other public stockholders. Our direct anchor investors will have the same rights to the funds held in the trust account with respect to the common stock underlying the units they may purchase in this offering as the rights afforded to our public stockholders.
In the event that we seek third-party equity financing in connection with our initial business combination, we have agreed to provide our direct anchor investors with the right to purchase shares of our Class A common stock on the terms and conditions as set forth in this prospectus under “Certain Relationships and Related Party Transactions”.
Our sponsor and direct anchor investors have committed to purchase an aggregate of 8,000,000 private placement warrants (or 8,900,000 if the underwriters’ over-allotment option is exercised in full) at a price of $1.00 per warrant (approximately $8,000,000 in the aggregate or $8,900,000 if the underwriters’ over-allotment option is exercised in full) in a private placement that will occur simultaneously with the closing of this offering. Among the private placement warrants, 7,019,607 private placement warrants (or 7,919,607 private placement warrants if the underwriters’ over-allotment option is exercised in full) will be purchased by our sponsor and 980,393 private placement warrants will be purchased by the direct anchor investors. Each private placement warrant is exercisable for one share of our Class A common stock at $11.50 per share, subject to adjustment as provided herein. The purchasers will be permitted to transfer the private placement warrants 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 the sponsor. Otherwise, these warrants will not, subject to certain limited exceptions, be transferable or salable until 30 days after the completion of our business combination. The private placement warrants will be non-redeemable so long as they are held by our sponsor, the direct anchor investors or their permitted transferees (except as described under “Description of Securities—Redeemable Warrants—Public Stockholders’ Warrants—Redemption of warrants when the price per share of Class A common stock equals or exceeds $10.00”). The private placement warrants may also be exercised by our sponsor, the direct anchor investors 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, including as to exercise price, exercisability and exercise period.
Pursuant to a registration rights agreement that 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 warrants (and the underlying shares of Class A common stock) 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. We will bear the costs and expenses of filing any such registration statements. See the section of this prospectus entitled “Certain Relationships and Related Party Transactions.”
Off-balance sheet arrangements; commitments and contractual obligations; quarterly results
As of September 30, 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, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act, (ii) 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, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis), and (iv) 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 this offering or until we are no longer an “emerging growth company,” whichever is earlier.
Proposed Business
Our Company
We are a blank check company whose business purpose is to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. We have not selected any specific target business and we have not, nor has anyone on our behalf, engaged in any substantive discussions, directly or indirectly, with any target business with respect to an initial business combination with us. We may pursue a target business in any industry or geographic region.
Our Mission
KINS Technology Group is focused on identifying and acquiring transformative technology businesses that are shaping the digital future and creating a new paradigm of communications and computing.
The five pillars of this new paradigm are next generation connectivity, open software, edge-cloud computing, predictive data analytics, and immersive media technologies.
We believe the world is at an inflection point and these technologies will transform all vertical market segments including IT, industrial, transportation, smart infrastructure, healthcare, education, agriculture, and entertainment.
Our Management (Officers & Directors)
Our leader Mr. Khurram Sheikh has assembled a dynamic management team of industry pioneers, entrepreneurs, operating executives, and market makers who have significant public sector experiences to source the next generation of transformative technologies and applications. We are staunch believers in the power of technology and design-thinking in creating disruptive human experiences, and we are convinced that the new age of technology ushers in transformational change. The team’s diverse skill sets of creative ideation, product innovation, industry development, operational excellence, and scale engineering blend together to provide a unique view of how businesses should function in the new age of technology. The diversity of the KINS team parallels the convergence occurring in the marketplace because members of the team have wide-ranging and complementary experience that will provide a solid foundation to evaluate a range of opportunities.
Mr. Khurram Sheikh has served as our Founder, Chairman and Chief Executive Officer since our inception. Mr. Sheikh has been at the forefront of innovation in the technology, mobile, semiconductor, telecom and media industries for the past 25 years with CEO and CTO roles at leading technology companies. Hired as an intern at Sprint’s Advanced Technology Labs in the summer of 1996 from Stanford University, he started a project called “Broadband Wireless” that ultimately led to the world’s first 4G system deployment in 2004. As CTO for Mobile Broadband at Sprint, Mr. Sheikh and his team pioneered the adoption of MIMO and OFDM technologies as the global technology standard for 4G and built the overall ecosystem for 4G from devices to infrastructure assembling a diverse set of global vendor partners. His team was also responsible for the multi-billion dollar acquisition of 200 MHz of nationwide BRS (Broadband Radio Service) spectrum at 2.5GHz. Currently, this spectrum is the cornerstone of the combined T-Mobile-Sprint’s 5G strategy and showcases his vision and foresight. After the Sprint-Nextel merger in 2005, Mr. Sheikh was hired as employee no.1 for wireless at Time Warner Cable as VP, Wireless Strategy and Development. There, he and his team designed the first outdoor cable WiFi hot-spots that are now deployed in the millions across the country. At Time Warner, his team was also responsible for the first cable MVNO as well as the multi-billion dollar acquisition of AWS spectrum on behalf of the cable consortium Spectrum Co. From 2007 to 2013, he was the CTO for Powerwave Technologies where he built the world’s first software defined active antenna and remote radio head technology that has been deployed in millions of installations globally and was subsequently appointed as the CEO of Powerwave in 2013. In 2014, Mr. Sheikh was appointed as the Chief Strategy and Technology Officer for Silicon Image (SIMG) and the President/CEO of its millimeter wave/5G
subsidiary SiBEAM. SiBEAM pioneered millimeter wave RF beamforming technology using CMOS processes, and built the largest patent portfolio in the space as well as high performance semiconductor and software products for consumer, industrial, and communications markets. SIMG was acquired by Lattice Semiconductor (Nasdaq:LSCC) for $600 million after which he was appointed the Chief Strategy and Technology Officer of the combined company responsible for corporate strategy, roadmap, M&A and technology development, and his team developed the core new strategy for Lattice’s edge AI applications product portfolio. From 2016 to early 2020, Mr. Sheikh was the CEO of kwikbit, a private company building a “network as a service” solution using gigabit radios, edge compute, virtualization, and artificial intelligence. Currently, he is Founder & CEO of Aijaad, a boutique strategic advisory firm where he advises both large private equity firms as well as boards of public companies on the future of 5G, IoT, Edge Computing and AI technologies and is actively involved in M&A, technology strategy and market development. Mr. Sheikh holds a Bachelor of Science degree in Electrical Engineering with highest honors from the University of Engineering & Technology in Pakistan, as well as a Master of Science degree in Electrical Engineering from Stanford University. He has also completed advanced management courses at the Harvard Business School and the Stanford Graduate School of Business.
Mr. Eric Zimits has served as our Chief Corporate Development Officer since August 2020. Mr. Zimits is also a Strategic Advisor to Netzyn, Inc., a company that has developed a distributed cloud platform that streams native applications and operating systems to any user device. Mr. Zimits has had an extensive career in the financial sector as an analyst and investor and was among the first analysts on Wall Street to identify the wireless and mobile communications opportunity, and later the internet infrastructure sector. Mr. Zimits was active in identifying, analyzing, and supporting initial public offering and follow-on public offering prospects throughout his career. He has worked on public offerings for industry pioneers including Qorvo, Checkpoint Software, F5 Networks, Proxim, and Openwave. Mr. Zimits’ years of experience tracking the communications industry teamed with his financial savvy enables him to guide portfolio companies in making sound business decisions based on a deep understanding of the marketplace. From 1992 to 1996, Mr. Zimits launched research coverage of the wireless industry as a General Partner at Volpe, Welty & Company. Mr. Zimits also held analyst positions at Rauscher Pierce Refsnes and Morgan Keegan & Company. From 1996 to 2000, Mr. Zimits was Managing Director and head of the Communications Research Group at Hambrecht & Quist (“H&Q”), and later Chase H&Q after the acquisition of H&Q. At H&Q, he initiated and supported numerous venture investments including Inter NAP, Sierra Wireless, Amber Networks, and Paragon Software. Following Chase H&Q, Mr. Zimits served as a Managing Director of Granite Ventures (“Granite”) from 2000 until 2016. At Granite, he focused on investing in early-stage communications, security, and software companies including RF Magic (NYSE: MXL), Speakeasy (acquired by Best Buy), Mojo Networks (acquired by Arista), Percello (acquired by Broadcom), and Localmind (acquired by Airbnb). In addition to his current role at Netzyn, he serves as advisor to early stage companies including Image Algorithmics and Nivasa. He received a Bachelor’s degree from Purdue University in biomedical engineering and an M.B.A. from Tulane University’s A.B. Freeman School of Business.
Mr. Hassan Ahmed has served as a member of our Board of Directors since August 2020. Mr. Ahmed most recently served as the Chairman and CEO of Affirmed Networks which pioneered virtualization technologies for mobile 5G networks. He ran Affirmed from inception, and after nearly a decade of growth, sold the company to Microsoft in March 2020. He was chief technology officer of Cascade Communications which Ascend Communications acquired for $3.7 billion. In 1999, Lucent Technologies acquired Ascend for $24 billion where he was General Manager of the Cascade business. He served as CEO and Chairman of Sonus Networks, growing it from its very early roots to the leading company transforming telephony to IP. Sonus went public in May 2000 and had a peak market value of $15.4 billion. Mr. Ahmed currently serves on the boards of Ciena Corp. (NYSE: CIEN) and Vesper. He has also served on other several public and private boards as well as on the boards of select educational institutions. Mr. Ahmed holds Bachelor and Master’s degrees in Engineering from Carleton University and a Ph.D in Electrical Engineering from Stanford University.
Ms. Di-Ann Eisnor has served as a member of our Board of Directors since August 2020. Ms. Eisnor is an entrepreneur and executive who is currently Co-Founder and CEO of Core, a venture-backed construction labor marketplace. Ms. Eisnor had a transformative impact and helped scale Waze, Inc.,
a crowd-sourced navigation and real-time traffic application, owned by Alphabet, Inc. Ms. Eisnor was with Waze for 10 years, founding its U.S. office in 2009. During her tenure she oversaw user growth from 10,000 to more than 100 million. Her infrastructure and mobility work brought data and tools into 800+ cities to reduce congestion and improve emergency response times. Waze was acquired by Google in 2013 for over $1 billion. At Google, she played a key role in operationalizing the Waze integration. She culminated her work at Waze as the VP Platform and Director of Growth. Prior to joining Waze, Ms. Eisnor was co-founder and Chief Executive Officer of Platial Inc., a collaborative, user-generated cartographic website. Ms. Eisnor currently serves on the board of Saia Inc. (Nasdaq: SAIA) and Gray Area Foundation for the Arts. Most recently, she was an executive of The We Company, a part of the We Work Companies, from February 2019 until her departure in October 2019. She is a venture partner at Obvious Ventures and is co-founder with Lupe Fiasco of Neighborhood Start Fund, a neighborhood-based micro-fund in underserved urban neighborhoods. She holds a Bachelor’s Degree in Studio Art and Business Administration from New York University. She is a 2014 Henry Crown Fellow of the Aspen Institute and a member of the Aspen Global Leadership Network.
Mr. Camillo Martino has served as a member of our Board of Directors since August 2020. Mr. Martino was a senior global semiconductor company executive and now serves as a board member and executive advisor to many global technology companies that are focused on building high growth businesses that emphasize the convergence around wireless, IoT, cloud, edge and AI applications. Prior to his current board roles, Mr. Martino was a chief executive officer and C-suite executive of a number of high technology companies worldwide. He is currently Chairman of the Board of Directors of MagnaChip Semiconductor (NYSE: MX) and has served on this Board since August 2016. Since 2018, he has also served on the Board of Directors at Sensera (ASX: SE1), which is focused on IoT platform solutions. Mr. Martino also serves on the Board of Directors at multiple privately-held companies, including VVDN Technologies (fastest growing ODM based in India with a focus on Wireless, Networking & IoT) and KeraCel (multi-material, multi-method 3D printing). Mr. Martino’s prior board service includes serving on the boards of Cypress Semiconductor from June 2017 through the sale of the company to Infineon in April 2020 for $10 billion and Moschip Technologies (BOM: 532407) from April 2017 to May 2019. As an operating executive, Mr. Martino served as Chief Executive Officer of Silicon Image, Inc. (where he also served as a director) from 2010 until the completion of its sale to Lattice Semiconductor Corporation (Nasdaq: LSCC) in March 2015, Chief Operating Officer of SAI Technology Inc. from January 2008 to December 2009 (where he also served as director from 2006 to 2010), and Chief Executive Officer of Cornice Inc. from 2005 to 2007 (where he also served as a director). From August 2001 to July 2005, Mr. Martino served as the executive vice president and chief operating officer at Zoran Corporation, a global SoC semiconductor company. Prior to that, Mr. Martino held multiple positions with National Semiconductor Corporation for a total of nearly 14 years in four countries. Mr. Martino holds a Bachelor of Applied Science from the University of Melbourne and a Graduate Diploma (in Digital Communications) from Monash University in Australia.
Mr. Atif Rafiq has served as a member of our Board of Directors since August 2020. Before stepping down in December 2020, Mr. Rafiq served as President of Commercial & Growth at MGM Resorts (NYSE: MGM), a Fortune 300 company, where he oversaw a significant portfolio of corporate functions as well as directed the company’s growth strategy. Previously, he was the Chief Digital Officer and Global CIO for Volvo, the Swedish luxury automaker and Global 250 company. He joined Volvo in January 2017 to partner with the CEO on business model and product innovation, and oversee efforts in mobility, connected cars, IoT, e-commerce, retail systems, CRM, big data, AI, and enterprise applications. From 2013 to 2017, Mr. Rafiq formulated and drove one of the largest digital transformations in the world at McDonald’s Corporation (NYSE: MCD) as Senior Vice President and Global Chief Digital Officer. In four years, the company went from ideas to global rollout of initiatives such as mobile ordering, digital delivery, curbside pickup, table service and ordering, digital menu boards, personalized offers, and kiosk based self-service ordering. These initiatives have been rolled out globally as McDonald’s “store of the future,” adding billions of incremental revenue. Mr. Rafiq has been at the center of Internet and digital disruption for over 20 years, building on 15 years of experience in pure play tech companies such as Amazon (Nasdaq: AMZN), Yahoo and AOL where he led large scale, fast growing digital businesses. Mr. Rafiq was also the Founder and CEO of a Silicon Valley start-up, Covigna, which he led from inception to exit. He holds a Bachelor’s degree in Mathematics-Economics from Wesleyan
University and a Master’s degree in Business Administration from the University of Chicago. Mr. Rafiq is a social media influencer, with over 600,000 followers on Twitter and LinkedIn, and has advised and invested in over 30 startups.
Mr. Allen Salmasi has served as a member of our Board of Directors since August 2020. Mr. Salmasi is a pioneer in the wireless industry with over 40 years of experience building leading edge companies. Mr. Salmasi is the CEO of Veea Inc., a provider of comprehensive full stack solutions for edge computing and communications. He is also the Chairman and CEO of NLabs Inc., a New York based family office investment firm. Mr. Salmasi serves on the boards of several companies engaged in the areas of quantum photonics, distributed hybrid edge-cloud and oncology. Prior to founding Veea in 2014, Mr. Salmasi was the Chairman, CEO and President of NextWave Wireless Inc. until its acquisition by AT&T (NYSE: ATT) in 2013. At NextWave, Mr. Salmasi and his team developed and implemented the first Mobile Virtual Network Operator (MVNO) service with MCI Corp. as its first major customer, in 1996. Through 2013, Verizon Wireless, AT&T and other carriers and telecom vendors purchased NextWave assets in separate transactions for multiple billions of dollars. Prior to NextWave, he served as the President of Wireless Division, Chief Strategy Officer and a member of the Board of Directors at Qualcomm, where he initiated and led the development of the cellular products business, including chipset and handset product developments and licensing and standards programs for Code Division Multiple Access (CDMA) technology, and initiated the Globalstar low-earth-orbit mobile satellite communications project. Prior to Qualcomm, Mr. Salmasi was the CEO and President of Omninet Corporation, where he initiated and led the development of OmniTRACS, the world’s first and largest commercial terrestrial mobile satellite communications service for two-way messaging and position reporting services that embodied the first commercial application of CDMA. Mr. Salmasi began his career as a research engineer at NASA JPL, and holds Bachelor’s degrees and Master’s degree with honors in Electrical Engineering, Business Management and Economics from Purdue University and a Master’s Degree in Applied Mathematics from the University of Southern California.
Our Market Opportunity
The technology sector has experienced tremendous transformation in recent years. The combination of big data, artificial intelligence, machine learning, ubiquitous high speed and mobile computing have fundamentally changed the way society operates. As part of this, businesses have begun to look at digital transformation as a means to modernize their communications infrastructure and technology in order to enable improvements in operational efficiency, innovation, customer engagement and experience, and remote work/work from home (‘WFH”). A key component of this enterprise transition is the adoption of cloud-first business strategies that enable customers and employees to access applications and services, anytime and anywhere. We believe we are still in the early days of this transition with only a fraction of an enterprise’s applications / workloads shifting to the cloud.
This transformation is creating a fundamental paradigm shift in how carriers and enterprises adopt their communications infrastructure and technology stacks. Where data is processed, how data is analyzed, how individuals communicate, and how networks are designed for flexibility, amongst many other changes, are all being driven by changes in technology. The five pillars of this new paradigm are next generation connectivity, open software, edge-cloud computing, predictive data analytics, and immersive media technologies. According to industry analysts, key segments of our five technology pillars offer a current industry size of $1 trillion growing to over $3.5 trillion in aggregate by 2027.
Next Generation Connectivity
Over the past two decades, the move to broadband internet and 4G mobile broadband has fundamentally changed the technology industry and created new multi-billion dollar businesses ranging from mobile app stores to enterprise SaaS to streaming subscription services. KINS believes the industry is poised for the next stage of transformation with the emergence of next generation connectivity technologies that deliver ubiquitous networks at gigabit speeds, operate at millisecond latencies, and provide unprecedented levels of attachment density. We believe that these networks will catalyze the development of next generation of applications and services.
The next generation of connectivity platforms includes 5G, Wi-Fi 6, UWB, OpenRAN, SD-WAN, and SASE to deliver this new age communications experience. We expect these capabilities to disrupt traditional business models and enable new IoT services and immersive applications to monetize data traffic. KINS believes that new core technologies such as beamforming, network slicing, IoT security, and location sensing will be required to deliver these applications and services. Also, this network transformation is expected to have a profound impact on the broad technology landscape, creating opportunities beyond the boundaries of traditional network investments.
Open Software
The adoption of open source software and modern DevOps tools has transformed the software industry. These technologies are being integrated into the network, creating powerful platforms that support robust developer ecosystems and free network operators from dependence on their hardware vendors. Now, developers can utilize open source libraries, exposed APIs, and container technology to rapidly prototype and deploy applications that operate securely on shared network resources. Combined with 5G capabilities such as network slicing, open software networks will enable new applications such as V2X communications, telehealth, and real-time promotions while disrupting old business models. KINS thinks that open networks will create investment opportunities across the software stack, including middleware, integration tools, security, and applications.
Edge-Cloud Computing
The cloud has rapidly consumed server compute, storage, media (video and music) and many enterprise applications. The economics of virtual storage and compute combined with the user experience derived from unfettered data access is expected to continue to drive growth in cloud computing. However, there are trends pushing compute from large, centralized data centers toward the network edge. Real-time applications, such as industrial control, autonomous vehicles, and mixed reality, require low latency processing, and the vast amount of data generated by these sensor-based applications necessitates data “down-select” at the edge to minimize unnecessary traffic to cloud servers. Finally, the need for sustained operation and security concerns will push many mission-critical applications to on-premise edge servers. Traditional architectures are evolving to support microservices, containers, and distributed applications. Organizations will need to scale out their network as traffic patterns within and between data centers continue to change and security requirements become more demanding. KINS believes that the growth of edge computing will create new markets as enterprises and service providers look to build connected clouds (public & private) and integrate applications across the edge and core data centers.
Predictive Data Analytics
Enterprises and service providers are data wellheads. Data has traditionally resided underutilized in static domains. Increasingly, the key definer of organizational success is the ability to collect, analyze, and convert data into business intelligence. As the scale of data has exceeded human scale, organizations are deploying AIOps (artificial intelligence for IT operations) to exploit vast data sets and automate data analysis. KINS will target companies that leverage machine learning and artificial intelligence to build and deliver solutions supporting enhanced network performance, user experiences, and industrial efficiency.
Immersive Media Technologies
The explosive growth of data center and network capacity has been driven by migration of movies, TV, and music to cloud-based services. The disruption has been massive, resulting in new media platforms and the consolidation of legacy companies into media conglomerates. Through this transition, the consumer continues to value branded content, engagement, and shared experiences. Media companies will adopt technologies that deliver compelling user experiences, and are investing heavily in 3D graphics, augmented reality, and mixed reality. These same technologies are being applied to deliver innovative industrial and commercial solutions that promote efficiency and safety. KINS will target
companies developing the system and software infrastructure that supports the growing immersive media opportunity including applications that apply to industry, training, and education.
Current Market Environment
Over the past several months, COVID-19 has acted as an accelerant to all of these existing trends as companies seek to cut costs and prepare for a more distributed workforce. Worldwide, companies have rapidly transitioned to a WFH environment with many companies planning to continue remote work following the pandemic. This trend is driving demand for deep connectivity and transformational leaps in technological capabilities. At the same time, multi-national companies are reimagining their supply chains and reshoring significant portions of their logistic requirements to cater for the exploding consumer trend to have all items shipped to their homes.
This dislocation has presented a number of transformational opportunities to catalyze growth. In the near-term, increased online traffic from consumers working and shopping from home is driving the need for additional services and a heightened importance of network security and trust in vendors. However, there is an expected permanent increase in IT spend to enable a more distributed workforce, including the necessity of edge and distributed computing requirements, accelerated transitions to cloud deployments, and continued increase in network traffic.
Another key trend is that enterprises are looking for new revenue streams and business models in this new environment, and our technology pillars will be key to enabling those opportunities.
According to industry analysts, key segments of our five technology pillars offer a current industry size of $1 trillion growing to over $3.5 trillion in aggregate by 2027.
Our Business Strategy
Consistent with our strategy, we have identified the following general criteria and guidelines to evaluate prospective target businesses. We may, however, decide to enter into our initial business combination with a target business that does not meet these criteria and guidelines. We intend to seek to acquire one or more businesses that we believe:
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have differentiated, transformational technology with a focus on next generation network and communications technologies;
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operate within a significant and growing addressable market with runway for further growth;
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have a validated business model, ability to scale, and have already gained a foothold in their markets;
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have a rapid growth and sustainable profit margin profile;
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are ready to operate in the scrutiny of public markets, with strong management, corporate governance and reporting policies in place;
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will likely be well received by public investors and are expected to have continued access to the public capital markets;
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have a proven and sophisticated management team with a track record and ability to create long-term shareholder value; and
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will provide attractive return for shareholders with reasonable and appropriate valuation expectations and significant remaining upside.
These criteria and guidelines 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 criteria and guidelines as well as other considerations, factors, criteria, and guidelines 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 and guidelines in our stockholder communications related to our initial business combination, which, as discussed in this prospectus, would be in the form of proxy materials or tender offer documents, as applicable, that we would file with the SEC.
Initial business combination
Nasdaq listing rules require that our initial business combination must be with one or more operating businesses or assets with a fair market value equal to at least 80% of the assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the income earned on the trust account). We refer to this as the 80% fair market value 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 or another independent entity that commonly renders valuation opinions with respect to the satisfaction of such criteria. We do not currently intend to purchase multiple businesses in unrelated industries in conjunction with our initial business combination, although there is no assurance that will be the case.
We anticipate structuring our initial business combination so that the post-transaction company in which our public stockholders own or acquire 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. However, 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 business 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 outstanding 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. 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 or issue a substantial number of new shares to third parties in connection with financing our initial business combination. In such cases, 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 outstanding 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 by us is what will be valued 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 and we will treat the target businesses together as the initial business combination for purposes of a tender offer or for seeking stockholder approval, as applicable. In addition, we have agreed not to enter into a definitive agreement regarding an initial business combination without the prior consent of our sponsor.
Our Acquisition Process
In evaluating a prospective target business, we expect to conduct a thorough due diligence review which may encompass, among other things, meetings with incumbent management and employees, document reviews, inspection of facilities, as well as a review of financial and other information that will be made available to us. We will also utilize our operational and capital allocation experience.
We are not prohibited from pursuing an initial business combination with a business that is affiliated with our initial stockholders, officers or directors, or any of their respective affiliates. In the event we seek to complete our initial business combination with a business that is affiliated with our initial stockholders, officers or directors, or any of their affiliates, we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm or another independent entity that commonly renders valuation opinions that our initial business combination is fair to us from a financial point of view.
Members of our management team will directly or indirectly own founder shares and/or private placement warrants 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 is included by a target business as a condition to our initial business combination.
Our officers and directors are from time to time 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 any prospective target business or had any substantive discussions, formal or otherwise, with respect to a business combination transaction with us.
Each of our officers and directors presently has, and any of them in the future may have additional, fiduciary, contractual or other obligations or duties 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 entities. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for one or more entities to which he or she has fiduciary, contractual or other obligations or duties, he or she will honor these obligations and duties to present such business combination opportunity to such entities first, and only present it to us if such entities reject the opportunity and he or she determines to present the opportunity to us. For more information, see the section entitled “Management—Conflicts of Interest.”
We do not believe, however, that the fiduciary duties or contractual obligations of our officers or directors will materially affect our ability complete our business combination. Our 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.
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 a target business an alternative to the traditional initial public offering through a merger or other 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 or could have negative valuation consequences. 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.
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 that 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.
Additionally, 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 end of that year’s second fiscal quarter, 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 end of that year’s second fiscal quarter.
Financial position
With funds held in trust available for a business combination initially in the amount of $195,000,000, after payment of up to $7,000,000 of deferred underwriting fees (or $224,250,000 after payment of up to $8,050,000 of deferred underwriting fees if the underwriters’ over-allotment option is exercised in full), in each case before fees and expenses associated with our initial business combination, 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 or leverage 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 complete our initial business combination using cash from the proceeds of this offering and the sale of the private placement warrants, our capital stock, 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, 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 redemptions of our Class A common stock, 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 the post-transaction company, the payment of principal or interest due on indebtedness incurred in completing our initial business combination, to fund the purchase of other assets, companies or for working capital.
Our officers and directors are from time to time 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 any prospective target business or had any substantive discussions, formal or otherwise, with respect to a business combination transaction with us.
We may seek to raise additional funds through a private offering of debt or equity in connection with the completion of our initial business combination (which may include a specified future issuance), and we may complete 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 applicable law or we decide to do so for business or other reasons, we would seek stockholder approval of such financing. There are no prohibitions on our ability to raise funds privately, including pursuant to any specified future issuance, 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.
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 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.
Sources of target businesses
Nasdaq listing rules require that an initial business combination must be with one or more operating businesses or assets with a fair market value equal to at least 80% of the assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the income earned on the trust account). We refer to this as the 80% fair market value test. 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 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 or another independent entity that commonly renders valuation opinions, with respect to the satisfaction of such criteria. We do not currently intend to purchase multiple businesses in unrelated industries in conjunction with our initial business combination, although there is no assurance that will be the case. Subject to this requirement, 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 solely with another blank check company or a similar company with nominal operations.
In any case, we will only complete an initial 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 business sufficient for it not to be required to register as an investment company under the Investment Company Act. If less than 100% of the outstanding 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 by us is what will be valued 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 of the significant risk factors.
In evaluating a prospective target business, we expect to conduct a thorough due diligence review which may encompass, among other things, meetings with incumbent management and employees, document reviews, inspection of facilities, as well as a review of financial, operational, legal and other information that 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. In addition, we initially intend to focus our search for an initial business combination in a single industry. By completing our business combination with only a single entity, our lack of diversification may:
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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
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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’ 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 cannot presently be stated with any certainty. 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 presently unknown if any of them will devote their full efforts to our affairs subsequent to our 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. The determination as to whether any members of our management team will remain with the combined company will be made at the time of our initial business combination.
Following our initial business combination, to the extent that we deem it necessary, we may seek to recruit additional managers to supplement the incumbent management team 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 listing requirements, 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.
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Type of Transaction
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Whether
Stockholder
Approval is
Required
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Purchase of assets
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No |
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Purchase of stock of target not involving a merger with the company
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No |
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Merger of target into a subsidiary of the company
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No |
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Merger of the company with a target
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Yes |
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Under Nasdaq’s listing rules, stockholder approval would be required for our initial business combination if, for example:
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we issue (other than in a public offering for cash) shares of common stock that will either (a) be equal to or in excess of 20% of the number of shares of common stock then issued and outstanding or (b) have voting power equal to or in excess of 20% of the voting power then issued and outstanding;
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any of our directors, officers or substantial stockholders (as defined by Nasdaq 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 of potential issuance of shares of common stock could result in an increase in outstanding shares of common stock or voting power of 5% or more; or
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the issuance or potential issuance of shares 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 applicable law or stock exchange rule will be made by us, solely in our discretion, and will be based on business and other reasons, which include a variety of factors, including, but not limited to:
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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;
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the expected cost of holding a stockholder vote;
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the risk that the stockholders would fail to approve the proposed business combination;
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other time and budget constraints of the company; and
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additional legal complexities of a proposed business combination that would be time-consuming and burdensome to present to stockholders.
Permitted purchases of, and other transactions with respect to, 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 initial stockholders, directors, officers, advisors or their affiliates may purchase public 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. There is no limit on the number of securities such persons may purchase. Additionally, at any time at or prior to our initial business combination, subject to applicable securities laws (including with respect to material nonpublic information), our initial stockholders, directors, officers, advisors or their affiliates may enter into transactions with investors and others to provide them with incentives to acquire public shares, vote their public shares in favor of our initial business combination or not redeem their public shares. However, they have no current commitments, plans or intentions to engage in such purchases or other transactions and have not formulated any terms or conditions for any such purchases or other transactions. None of the funds held in the trust account will be used to purchase public shares or warrants in such transactions. Such persons will be subject to restrictions in making any such purchases when they are in possession of any material non-public information 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. We will adopt an insider trading policy which will require insiders to (1) refrain from purchasing our securities during certain blackout periods and when they are in possession of any material non-public information and (2) 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 initial stockholders, directors, officers, advisors or their affiliates purchase public shares in privately negotiated transactions from public stockholders who have already elected to exercise their redemption rights or submitted a proxy to vote against our initial business combination, such selling stockholders would be required to revoke their prior elections to redeem their shares and any proxy to vote against our initial business combination. 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 be required to comply with such rules.
The purpose of any such transaction could be to (i) vote such shares in favor of the initial business combination and thereby increase the likelihood of obtaining stockholder approval of the initial business combination, (ii) reduce the number of public warrants outstanding or to vote such warrants on any matters submitted to the warrant holders for approval in connection with our initial business combination or (iii) 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. Any such transactions 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 Class A common stock or warrants and the number of beneficial holders of our securities may be reduced, possibly making it difficult to obtain or maintain the quotation, listing or trading of our securities on a national securities exchange.
It is likely that our initial stockholders, officers, directors, and/or their affiliates would identify the stockholders with whom they may pursue privately negotiated transactions by either the stockholders contacting us or them directly or by our receipt of redemption requests submitted by stockholders (in the case of public shares) following our mailing of proxy materials in connection with our initial business combination. To the extent that our initial stockholders, officers, directors, advisors or their affiliates enter into a private transaction, they would identify and contact only potential selling or redeeming 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 initial stockholders, officers, directors, advisors or their affiliates will be restricted from purchasing shares if such purchases comply with Regulation M under the Exchange Act and the other federal securities laws.
Any purchases by our sponsor, officers, directors, and/or any of their respective affiliates who are affiliated purchasers under Rule 10b-18 under the Exchange Act will be restricted unless such purchases are 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 sponsor, officers, directors, and/or any of their respective affiliates will be restricted from making purchases of common stock if such 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 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, calculated 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 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 approximately $10.10 per public share. The per-share
amount we will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting commissions we will pay to the underwriters. The redemption rights will include the requirement that a beneficial holder must identify itself in order to validly redeem its shares. There will be no redemption rights upon the completion of our initial business combination with respect to our warrants. Our sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to any founder 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 shares of Class A common stock upon the completion of our initial business combination either (i) in connection with a stockholder meeting called to approve the business combination or (ii) by means of a tender offer. Except as required by applicable law, 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 under stock exchange listing requirements. 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 certificate of incorporation would typically require stockholder approval. If we structure a business combination transaction with a target company in a manner that requires stockholder approval, we will not have discretion as to whether to seek a stockholder vote to approve the proposed business combination.
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 certificate of incorporation:
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conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers, and
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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 initial stockholders will terminate any plan established in accordance with Rule 10b5-1 under the Exchange Act 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 that 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 are not purchased by our initial stockholders, which number will be based on the requirement that we will only redeem our public shares so long as (after such redemption) our net tangible assets will be at least $5,000,001 either immediately prior to or upon consummation of our initial business combination (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 the initial business combination, and instead may search for an alternate business combination.
If, however, stockholder approval of the transaction is required by applicable law or stock exchange listing requirement, or we decide to obtain stockholder approval for business or other reasons, we will, pursuant to our certificate of incorporation:
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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
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file proxy materials with the SEC.
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. 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. Our sponsor, officers and directors will count toward this quorum and have agreed to vote any founder shares and any public shares held by them in favor of our initial business combination. As a result, in addition to their founder shares, we would need only 7,500,001, or 37.5% (assuming all outstanding shares are voted), of the 20,000,000 public shares sold in this offering to be voted in favor of a transaction in order to have our initial business combination approved (assuming the underwriters’ over-allotment option is not exercised). However, because we generally only need a majority of the outstanding shares to be voted in favor of a proposed business combination to have such transaction approved, the number of public shares needed to be voted in favor of any transaction decreases as the overall number of public shares voted decreases. Accordingly, we would need only 1,250,001, or 6.25%, of the 20,000,000 public shares sold in this offering to be voted in favor of a transaction if only the minimum number of shares representing a quorum are voted in order to have our initial business combination approved (assuming the underwriters’ over-allotment option is not exercised). In addition, as a result of the founder shares and private placement warrants that our direct anchor investors may hold (directly or indirectly), they may have different interests with respect to a vote on an initial business combination than other public stockholders. These quorum and voting thresholds, and the voting agreements of our sponsor, officers and directors, may make it more likely that we will consummate our initial business combination. Each public stockholder may elect to redeem its public shares irrespective of whether they vote for or against the proposed transaction or do not vote at all.
Our certificate of incorporation will provide that we will only redeem our public shares so long as (after such redemption) our net tangible assets will be at least $5,000,001 either immediately prior to or upon consummation of our initial business combination (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. For example, the proposed business combination may require: (i) cash consideration to be paid to the target or its owners, (ii) cash to be transferred to the target for working capital or other general corporate purposes or (iii) 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, and instead may search for an alternate business combination.
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 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 any Excess Shares owned by them, without our prior consent. 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 management 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 management 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, our certificate of incorporation does not restrict 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 stockholder meeting
If we seek stockholder approval of a proposed business combination, 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 up to two business days prior to the vote on the proposal to approve the business combination, 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 proxy materials 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, which may include the requirement that a beneficial holder must identify itself in order to validly redeem its shares. Accordingly, a public stockholder would have from the time we send out our proxy materials until up to two business days prior to the vote on the business combination to tender its shares if it wishes to seek to exercise its redemption rights. 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 DWAC System. The transfer agent will typically charge the tendering broker a fee of approximately $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 some blank check companies. In order to perfect redemption rights in connection with their business combinations, some 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 two business days prior to the date of the stockholder meeting set forth in our proxy materials, as applicable (unless we elect to allow additional withdrawal rights. 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 different business combination until 18 months from the closing of this offering or during any Extension Period.
Redemption of public shares and liquidation if no initial business combination
Our certificate of incorporation provides that we will have only 18 months from the closing of this offering to complete our initial business combination. If we have not completed our initial business combination within such time period or during any Extension Period, we 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 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 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); and (iii) 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 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 allotted time period.
Our sponsor, officers, directors and the direct anchor investors have waived their rights to liquidating distributions from the trust account with respect to any founder shares held by them if we fail to complete our initial business combination within the allotted time period. However, if they 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 complete our initial business combination within the allotted time period.
Our sponsor, officers, and directors have agreed, pursuant to a letter agreement with us (filed as an exhibit to the registration statement of which this prospectus forms a part), that they will not propose any amendment to our certificate of incorporation (A) to modify the substance or timing of our obligation to allow redemption in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination within 18 months from the closing of this offering or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity, unless we provide our public stockholders with the opportunity to redeem their public 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 public shares. However, we will only redeem our public shares so long as (after such redemption) our net tangible assets will be at least $5,000,001 either immediately prior to or upon consummation of our initial business combination (so that we do not then become subject to the SEC’s “penny stock” rules). If this optional redemption right is exercised
with respect to an excessive number of public shares such that we cannot satisfy the net tangible asset requirement (described above) we would not proceed with the amendment or the related redemption of our public shares.
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 approximately $1,250,000 of proceeds held outside the trust account (the amount of such proceeds to increase proportionally with the amount of underwriting discounts and commissions not paid to the underwriters in the event certain investors identified by the sponsor purchase units in this offering at the initial public offering price), 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 on interest income earned on the trust account balance, 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 warrants, other than the proceeds deposited in the trust account, and without taking into account interest, if any, earned on the trust account and any tax payments or expenses for dissolution of the trust, the per-share redemption amount received by stockholders upon our dissolution would be $10.10. 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 $10.10. 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 and other entities with which we do business execute agreements with us waiving any right, title, interest and 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. 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 management is unable to find a service provider willing to execute a waiver. Our independent registered public accounting firm will not execute agreements with us waiving such claims to the monies held in the trust account, nor will the underwriters of this offering.
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. 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 by 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 (i) $10.10 per public share or (ii) 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 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. In the event that an executed waiver is deemed to be unenforceable against a third party, then 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, which is a newly formed entity, has sufficient funds to satisfy its indemnity obligations and believe that our sponsor’s only assets are securities of our company. We have not asked our sponsor to reserve for such indemnification obligations. Therefore, we believe it is unlikely that our sponsor would be able to satisfy those obligations. As a result, if any such claims were successfully made against the trust account, the funds available for our initial business combination and redemptions could be reduced to less than $10.10 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 public share in connection with any redemption of your public shares. None of our 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 (i) $10.10 per public share or (ii) 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 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 may choose not to do so if, for example, the cost of such legal action is deemed by the independent directors to be too high relative to the amount recoverable or if the independent directors determine that a favorable outcome is not likely. We have not asked our sponsor to reserve for such indemnification obligations. Therefore, we believe it is unlikely our sponsor would be able to satisfy those obligations. Accordingly, we cannot assure you that due to claims of creditors the actual value of the per-share redemption price will not be less than $10.10 per public share.
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 (except our independent registered public accounting firm), prospective target businesses and 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 approximately $1,250,000 from the proceeds of this offering and the sale of the private placement warrants (the amount of such proceeds to increase proportionally with the amount of underwriting discounts and commissions not paid to the underwriters in the event certain investors identified by the sponsor purchase units in this offering at the initial public offering price) with which to pay any such potential claims. 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 $750,000, 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 $750,000, 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 the required time period 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 the required time period, 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 have not completed our initial business combination within such time period or during any Extension Period, we 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 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 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); and (iii) 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 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 the end of our acquisition period 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 10 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 to acquire, 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 (except for our independent registered public accounting firm), prospective target businesses and 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 (i) $10.10 per public share or (ii) 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 taxes. This liability will not apply with respect 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. 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 $10.10 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 of directors may be viewed as having breached its fiduciary duty to our creditors and/or may have acted in bad faith, 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.
Our public stockholders will be entitled to receive funds from the trust account only on the earliest of (a) the completion of our initial business combination and then, only in connection with those public shares that such stockholder has properly elected to redeem, subject to the limitations described in this prospectus, (b) the redemption of any public shares properly submitted in connection with a stockholder vote to amend our certificate of incorporation (i) to modify the substance or timing of our obligation to allow redemption in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination within 18 months from the closing of this offering or (ii) with respect to any other provisions relating to stockholders’ rights or pre-initial business combination activity and (c) the redemption of our public shares if we have not completed our business combination within 18 months from the closing of this offering, subject to applicable law. Stockholders who do not exercise their rights to the funds in connection with an amendment to our certificate of incorporation would still have rights to the funds in connection with a subsequent 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 the 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 as described above. Holders of warrants will not have any rights of proceeds held in the trust account with respect to the warrants.
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 have not completed our initial business combination within 18 months from the closing of this offering or during any Extension Period.
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Redemptions in
Connection with our
Initial Business
Combination
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Other Permitted
Purchases of Public
Shares by our
Affiliates
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Redemptions if we
fail to Complete an
Initial Business
Combination
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Calculation of redemption price
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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 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
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If we seek stockholder approval of our initial business combination, our founders, directors, officers, advisors or any of their respective 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. Such purchases will be restricted except to the
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If we have not completed our initial business combination within 18 months from the closing of this offering or during any Extension Period, we will redeem all public shares at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account (which is initially anticipated to be $10.10 per public
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Redemptions in
Connection with our
Initial Business
Combination
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Other Permitted
Purchases of Public
Shares by our
Affiliates
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Redemptions if we
fail to Complete an
Initial Business
Combination
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public shares for cash equal to the aggregate amount then on deposit in the trust account, calculated as of two business days prior to the consummation of the initial business combination (which is initially anticipated to be $10.10 per public share), including interest (which interest shall be net of taxes payable), 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 following such redemptions, and any limitations (including but not limited to cash requirements) agreed to in connection with the negotiation of terms of a proposed business combination.
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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.
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share), 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 public shares.
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Impact to remaining stockholders
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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 interest withdrawn in order to pay our taxes (to the extent not paid from amounts accrued as interest on the funds held in the trust account).
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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.
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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.
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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.
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Terms of Our Offering
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Terms Under a Rule 419 Offering
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Escrow of offering proceeds
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$202,000,000 of the net proceeds of this offering and the sale of the private placement warrants will be deposited into a U.S.-based trust account, with Continental Stock Transfer & Trust Company acting as trustee.
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Approximately $170,100,000 of the offering proceeds would 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.
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Investment of net proceeds
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$202,000,000 of the net offering proceeds and the sale of the private placement warrants held in trust will be held as cash or 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 which invest only in direct U.S. government treasury obligations.
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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.
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Receipt of interest on escrowed funds
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Interest on proceeds from the trust account to be paid to stockholders is reduced by (i) any taxes paid or payable; and (ii) 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.
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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.
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Limitation on fair
value or net assets of target business
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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 assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the income earned on the trust account) at the time of the agreement to enter into the initial business combination.
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The fair value or net assets of a target business must represent at least 80% of the maximum offering proceeds.
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Terms of Our Offering
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Terms Under a Rule 419 Offering
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Trading of securities issued
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The units will begin trading on or promptly after the date of this prospectus. The Class A common stock and warrants comprising the units will begin separate trading on the 52nd day following the date of this prospectus (or, if such date is not a business day, the following business day) unless the Representatives informs 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. If the underwriters’ over-allotment option is exercised following the initial filing of such Current Report on Form 8-K, an additional 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.
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No trading of the units or the underlying Class A 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.
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Exercise of the warrants
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The warrants cannot be exercised until the later of 30 days after the completion of our initial business combination and 12 months from the closing of this offering.
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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.
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Election to remain an investor
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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, calculated 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 taxes, 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 listing requirements to hold a stockholder vote. If we are not required by
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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 it elects to remain a stockholder of the company or require the return of 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
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Terms of Our Offering
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Terms Under a Rule 419 Offering
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applicable law or stock exchange listing requirements and do not otherwise decide to hold a stockholder vote, we will, pursuant to our 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 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. Additionally, each public stockholder may elect to redeem their public shares irrespective of whether they vote for or against the proposed transaction or do not vote at all. 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.
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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.
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Business combination deadline
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If we have not completed our initial business combination within 18-months from the closing of this offering or during any Extension Period, we 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 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
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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.
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Terms of Our Offering
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Terms Under a Rule 419 Offering
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funds held in the trust account and not previously released to us to pay our 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); and (iii) 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 in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
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Release of funds
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Except with respect to interest earned on the funds held in the trust account that may be released to us to pay our tax obligations, the proceeds from this offering and the sale of the private placement warrants held in the trust account held in the trust account will not be released from the trust account until the earliest to occur of: (i) the completion of our initial business combination, (ii) the redemption of any public shares properly submitted in connection with a stockholder vote to amend our certificate of incorporation (a) to modify the substance or timing of our obligation to allow redemption in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination within 18 months from the closing of this offering or (b) with respect to any other provisions relating to stockholders’ rights or pre-initial business combination activity and (iii) the redemption of 100% of our public shares if we have not completed a business combination within the allotted time frame (subject to the requirements
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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.
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Terms of Our Offering
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Terms Under a Rule 419 Offering
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of applicable law). Stockholders who do not exercise their rights to the funds in connection with an amendment to our certificate of incorporation would still have rights to the funds in connection with a subsequent business combination. 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 deferred underwriting commissions, 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.
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Competition
In identifying, evaluating and selecting a target business for our 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, 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 we do. Our ability to acquire larger target businesses will be limited by our available financial resources. This inherent limitation gives others an advantage in pursuing the acquisition of 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.
Facilities
Our executive offices are located at Four Palo Alto Square, Suite 200, 3000 El Camino Real, Palo Alto, CA 94306 and our telephone number is 650-575-4456. The cost for this space is included in the $20,000 per month fee that we will pay our sponsor for office space, administrative and support services. We consider our current office space adequate for our current operations.
Employees
We currently have two officers. These individuals 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 they will devote in any time period will vary based on whether a target business has been selected for our initial business combination and the stage of the initial business combination process we are in. We do not intend to have any full time employees prior to the completion of our initial business combination.
Periodic reporting and financial information
We will register our 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 accountants.
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. In all likelihood, these financial statements will need to be prepared in accordance with GAAP and the historical financial statements may be required to be audited in accordance with PCAOB standards. We cannot assure you that any particular target business selected by us as a potential acquisition candidate will have financial statements prepared in accordance with GAAP and PCAOB standards or that the potential target business will be able to prepare its financial statements in accordance with GAAP and PCAOB standards. To the extent that this requirement cannot be met, we may not be able to acquire the proposed target business. 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 qualify as an emerging growth company, will we be required to comply with the independent registered public accounting firm attestation requirements on our internal control over financial reporting. 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 acquisition.
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
Officers and directors
Our officers and directors are as follows:
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Name
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Age
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Position
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Khurram Sheikh
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49
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Chairman, Chief Executive Officer, Chief Financial Officer
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Eric Zimits
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60
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Secretary and Chief Corporate Development Officer
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Hassan Ahmed
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62
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Director
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Di-Ann Eisnor
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48
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Director
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Camillo Martino
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58
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Director
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Atif Rafiq
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47
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Director
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Allen Salmasi
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66
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Director
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Mr. Khurram Sheikh has served as our Founder, Chairman and Chief Executive Officer since our inception and Chief Financial Officer since August 2020. Mr. Sheikh has been at the forefront of innovation in the technology, mobile, semiconductor, telecom and media industries for the past 25 years with CEO and CTO roles at leading technology companies. Since March 2020, Mr. Sheikh has been the Founder, Executive Chairman & CEO of Aijaad, a boutique strategic advisory firm where he advises both large private equity firms as well as boards of public companies on the future of 5G, IoT, Edge Computing and AI technologies and is actively involved in M&A, technology strategy and market development. From 2016 to early 2020, Mr. Sheikh was the CEO of kwikbit, a private company building a “network as a service” solution using gigabit radios, edge compute, virtualization, and artificial intelligence. Prior to kwikbit, in 2014, Mr. Sheikh was appointed as the Chief Strategy and Technology Officer for Silicon Image (SIMG) and the President/CEO of its millimeter wave/5G subsidiary SiBEAM. SIMG was acquired by Lattice Semiconductor (Nasdaq:LSCC) in 2015 for $600 million after which Mr. Sheikh was appointed the Chief Strategy and Technology Officer of the combined company responsible for corporate strategy, roadmap, M&A and technology development and was there until 2016. From 2007 onwards, he was the CTO for Powerwave Technologies, a large wireless infrastructure vendor. Powerwave filed for Chapter 11 bankruptcy protection in January 2013, and in April 2013 Mr. Sheikh was appointed as the CEO of Powerwave to help with the sale of the company. Later that year, Mr. Sheikh successfully facilitated the sale of approximately 1,400 patents owned by Powerwave to private equity firm Gores Group. From 2005 to 2007, Mr. Sheikh was Vice President, Wireless Strategy and Development at Time Warner Cable leading the cable company’s entry into the wireless space. From 1996 to 2005, Mr. Sheikh held senior technology roles at Sprint including CTO Mobile Broadband responsible for deploying the world’s first 4G system and acquisition of multi-billion dollar spectrum assets at 2.5GHz. Mr. Sheikh holds a Bachelor of Science degree in Electrical Engineering with highest honors from the University of Engineering & Technology in Pakistan, as well as a Master of Science degree in Electrical Engineering from Stanford University. Mr. Sheikh is well qualified to serve as Chairman of our board because of his extensive experience advising boards of directors of public and private companies and his extensive professional experience.
Mr. Eric Zimits has served as our Chief Corporate Development Officer since August 2020. Since 2016, Mr. Zimits has served as a Strategic Advisor to Netzyn, Inc., a company that has developed a distributed cloud platform that streams native applications and operating systems to any user device. In addition to his current role at Netzyn, he serves as advisor to early stage companies including Image Algorithmics and Nivasa. Prior to Netzyn, Mr. Zimits served as a Managing Director of Granite Ventures from 2000 until 2016. At Granite, he focused on investing in early-stage communications, security, and software companies including RF Magic (NYSE: MXL), Speakeasy (acquired by Best Buy), Mojo Networks (acquired by Arista), Percello (acquired by Broadcom), and Localmind (acquired by Airbnb). From 1996 to 2000, Mr. Zimits was Managing Director and head of the Communications Research Group at Hambrecht & Quist, and later ChaseH&Q after the acquisition of H&Q. At H&Q, he initiated and supported numerous venture investments including InterNAP, Sierra Wireless, Amber Networks, and Paragon Software. From 1992 to 1996, Mr. Zimits was a General Partner at Volpe, Welty & Company.
Before that, he held analyst positions at Rauscher Pierce Refsnes and Morgan Keegan & Company. Mr. Zimits received a Bachelor’s degree from Purdue University in biomedical engineering and an M.B.A. from Tulane University’s A.B. Freeman School of Business.
Mr. Hassan Ahmed has served as a member of our Board of Directors since August 2020. Mr. Ahmed most recently served as the Chairman and CEO of Affirmed Networks, which pioneered virtualization technologies for mobile, especially 5G, networks, from inception until the company was sold to Microsoft in March 2020. Before that, he was chief technology officer of Cascade Communications, which Ascend Communications acquired in 1997. Prior to Cascade, Mr. Ahmed served as CEO and Chairman of Sonus Networks. Mr. Ahmed currently serves on the board of Ciena Corp. (NYSE: CIEN) and Vesper. Mr. Ahmed holds Bachelor and Master’s degrees in Engineering from Carleton University and a Ph.D in Electrical Engineering from Stanford University. Mr. Ahmed is well qualified to serve on our board because of his extensive experience advising boards of directors of public and private companies and his extensive professional experience.
Ms. Di-Ann Eisnor has served as a member of our Board of Directors since August 2020. Since November 2019, Ms. Eisnor has served as Co-Founder and CEO of Core, a venture-backed construction labor marketplace. Before that, from February 2019 until October 2019, she was an executive of The We Company, a part of the We Work Companies, where she was responsible for development of their cities platform. Prior to that, Ms. Eisnor served as Director of Urban Systems at Google, from June 2018 until February 2019. Previously, Ms. Eisnor was with Waze, Inc., a crowd-sourced navigation and real-time traffic application owned by Alphabet, Inc., for 10 years, most recently serving as the VP Platform and Director of Growth. Prior to joining Waze, Ms. Eisnor was co-founder and Chief Executive Officer of Platial Inc., a collaborative, user-generated cartographic website. Ms. Eisnor currently serves on the board of Saia Inc. (Nasdaq: SAIA) and Gray Area Foundation for the Arts. She is a venture partner at Obvious Ventures and is co-founder with Lupe Fiasco of Neighborhood Start Fund, a neighborhood-based micro-fund in underserved urban neighborhoods. She holds a Bachelor’s Degree in Studio Art and Business Administration from New York University. She is a 2014 Henry Crown Fellow of the Aspen Institute and a member of the Aspen Global Leadership Network. Ms. Eisnor is well qualified to serve on our board because of her extensive experience advising boards of directors of public and private companies and her extensive professional experience.
Mr. Camillo Martino has served as a member of our Board of Directors since August 2020. Mr. Martino was a senior global semiconductor company executive and now serves as a board member and executive advisor to many global technology companies. Prior to his current board roles, Mr. Martino was a chief executive officer and C-suite executive of a number of high technology companies worldwide. He is currently Chairman of the Board of Directors of MagnaChip Semiconductor (NYSE: MX) and has served on this Board since August 2016. Since 2018, he has also served on the Board of Directors at Sensera (ASX: SE1), which is focused on IoT platform solutions. Mr. Martino also serves on the Board of Directors at multiple privately-held companies, including VVDN Technologies (fastest growing ODM based in India with a focus on Wireless, Networking & IoT) and KeraCel (multi-material, multi-method 3D printing). Mr. Martino’s prior board service includes serving on the boards of Cypress Semiconductor from June 2017 through the sale of the company to Infineon in April 2020 and Moschip Technologies (BOM: 532407) from April 2017 to May 2019. As an operating executive, Mr. Martino served as Chief Executive Officer of Silicon Image, Inc. (where he also served as a director) from 2010 until the completion of its sale to Lattice Semiconductor Corporation (Nasdaq: LSCC) in March 2015, Chief Operating Officer of SAI Technology Inc. from January 2008 to December 2009 (where he also served as director from 2006 to 2010), and Chief Executive Officer of Cornice Inc. from 2005 to 2007 (where he also served as a director). From August 2001 to July 2005, Mr. Martino served as the executive vice president and chief operating officer at Zoran Corporation, a global SoC semiconductor company. Prior to that, Mr. Martino held multiple positions with National Semiconductor Corporation for a total of nearly 14 years. Mr. Martino holds a Bachelor of Applied Science from the University of Melbourne and a Graduate Diploma (in Digital Communications) from Monash University in Australia. Mr. Martino is well qualified to serve on our board because of his extensive experience advising boards of directors of public and private companies and his extensive professional experience.
Mr. Atif Rafiq has served as a member of our Board of Directors since August 2020. Since May 2019 until December 2020, Mr. Rafiq served as President of Commercial & Growth at MGM Resorts (NYSE: MGM), a global hospitality and entertainment company. Previously, from January 2017 until May 2019, he was the Chief Digital Officer and Global CIO for Volvo, the Swedish luxury automaker. Before Volvo, from 2013 to 2017, Mr. Rafiq served as Senior Vice President and Global Chief Digital Officer at McDonald’s Corporation (NYSE: MCD). Before McDonald’s Mr. Rafiq held roles at Amazon (Nasdaq: AMZN), Yahoo and AOL. Mr. Rafiq was also the Founder and CEO of a Silicon Valley start-up, Covigna, which he led from inception to exit. He holds a Bachelor’s degree in Mathematics-Economics from Wesleyan University and a Master’s degree in Business Administration from the University of Chicago. Mr. Rafiq is well qualified to serve on our board because of his extensive professional experience in the technology sector.
Mr. Allen Salmasi has served as a member of our Board of Directors since August 2020. Since March 2014, Mr. Salmasi has served as CEO of Veea Inc., a provider of comprehensive full stack solutions for edge computing and communications. Since February 2013, he has also served as Chairman and CEO of NLabs Inc., a New York based family office investment firm. Prior to founding Veea in 2014, Mr. Salmasi was the Chairman, CEO and President of NextWave Wireless Inc. until its acquisition by AT&T (NYSE: ATT) in 2013. Prior to NextWave, he served as the President of Wireless Division, Chief Strategy Officer and a member of the Board of Directors at Qualcomm. Prior to Qualcomm, Mr. Salmasi was the CEO and President of Omninet Corporation. Mr. Salmasi began his career as a research engineer at NASA JPL, and holds Bachelor’s degrees and Master’s degree with honors in Electrical Engineering, Business Management and Economics from Purdue University and a Master’s Degree in Applied Mathematics from the University of Southern California. Mr. Salmasi is well qualified to serve on our board because of his experience advising boards of directors of public and private companies and his extensive professional experience.
Number and terms of office of officers and directors
We intend to have six directors upon completion of this offering. 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. The term of office of the first class of directors, consisting of Di-Ann Eisnor and Atif Rafiq, will expire at our first annual meeting of stockholders. The term of office of the second class of directors, consisting of Allen Salmasi and Hassan Ahmed, will expire at the second annual meeting of stockholders. The term of office of the third class of directors, consisting of Camillo Martino and Khurram Sheikh, will expire at the third annual meeting of stockholders. We may not hold an annual meeting of stockholders until after we consummate our initial business combination.
Prior to the completion of our initial business combination, only holders of our Class B common stock will have the right to vote on the election of directors. Holders of our public shares will not be entitled to vote on the election of directors during such time. In addition, prior to the completion of our initial business combination, holders of a majority of the outstanding shares of our Class B common stock may remove a member of the board of directors for any reason. These provisions of our certificate of incorporation may only be amended by a resolution passed by the holders of a majority of shares of our Class B common stock.
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 one or more Chairmen of the Board, one or more Chief Executive Officers, a President, a Chief Financial Officer, Chief Investment Officer, Vice Presidents, Secretary, Treasurer and such other offices as may be determined by the board of directors.
Director independence
Nasdaq listing standards require that a majority of our board of directors be independent. 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 with the company which in the opinion of the company’s board of directors, could 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 “independent directors” as defined in Nasdaq’s listing standards and applicable SEC rules. Our board of directors has determined that each of Hassan Ahmed, Di-Ann Eisnor, Camillo Martino, Atif Rafiq and Allen Salmasi are “independent directors” as defined in the Nasdaq listing standards and applicable SEC rules. Our audit committee will be entirely composed of independent directors meeting Nasdaq’s additional requirements applicable to members of the audit committee. Our independent directors will have regularly scheduled meetings at which only independent directors are present.
Officer and director compensation
None of our officers or directors has received any cash compensation for services rendered to us. No compensation of any kind, including finder’s and consulting fees, will be paid by us to our sponsor, officers and directors, or any of their respective affiliates, for services rendered prior to or in connection with the completion of our initial business combination, except that at the closing of our initial business combination, we may pay a customary financial consulting fee to our initial stockholders, officers and directors, which will not be made from the proceeds of this offering held in the trust account prior to the completion of our initial business combination. We may pay such financial consulting fee in the event such party or parties provide us with specific target company, industry, financial or market expertise, as well as insights, relationships, services or resources in order to assess, negotiate and consummate an initial business combination. The amount of any such financial consulting fee we pay will be based upon the prevailing market for similar services for comparable transactions at such time, and will be subject to the review of our audit committee pursuant to the audit committee’s policies and procedures relating to transactions that may present conflicts of interest. We would disclose any such fee in the proxy or tender offer materials used in connection with a proposed business combination. However, these individuals 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 by us to our initial stockholders, officers or directors, or our or their affiliates.
After the completion of our initial business combination, directors or members of our management team who remain with us may be paid consulting or management fees from the combined company. All of these fees 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. We have not established any limit on the amount of such fees that may be paid by the combined company to our directors or members of management. It is unlikely the amount of such compensation will be known at the time of the proposed business combination, because the directors of the post-combination business will be responsible for determining officer and director compensation. Any compensation to be paid to our officers will be determined, or recommended to the board of directors for determination, either by a compensation committee constituted solely by independent directors or by a majority of the independent directors on our board of directors.
Following a business combination, to the extent we deem it necessary, we may seek to recruit additional managers to supplement the incumbent management team 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.
Committees of the board of directors
Following the consummation of this offering, our board of directors will have three standing committees: an audit committee, a compensation committee and a nominating committee. Nasdaq rules and Rule 10A-3 of the Exchange Act generally require that the audit committee of a listed company be comprised solely of independent directors, and Nasdaq rules generally require that the compensation committee of a listed company be comprised solely of independent directors. Each committee will operate
under a charter that will be approved by our board of directors and will have the composition and responsibilities described below. The charter of each committee will be available on our website following the consummation of this offering.
Audit committee
Prior to the consummation of this offering, we will establish an audit committee of the board of directors. Each of Camillo Martino, Hassan Ahmed and Di-Ann Eisnor will serve as members of our audit committee. Camillo Martino will serve as chair of the audit committee. Under Nasdaq listing standards and applicable SEC rules, we are required to have at least three members of the audit committee, all of whom must be independent. Each of Camillo Martino, Hassan Ahmed and Di-Ann Eisnor meet the independent director standard under Nasdaq listing standards and under Rule 10-A-3(b)(1) of the Exchange Act.
Each member of the audit committee is financially literate and our board of directors has determined that Camillo Martino qualifies as an “audit committee financial expert” as defined in applicable SEC rules.
We will adopt an audit committee charter, which details the principal functions of the audit committee, including:
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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;
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the appointment, compensation, retention, replacement, and oversight of the work of the independent auditors and any other independent registered public accounting firm engaged by us;
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pre-approving all audit and permitted non-audit services to be provided by the independent auditors or any other registered public accounting firm engaged by us, and establishing pre-approval policies and procedures;
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reviewing and discussing with the independent auditors all relationships the auditors have with us in order to evaluate their continued independence;
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setting clear hiring policies for employees or former employees of the independent auditors;
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setting clear policies for audit partner rotation in compliance with applicable laws and regulations;
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obtaining and reviewing a report, at least annually, from the independent auditors describing (i) the independent auditor’s internal quality-control procedures and (ii) 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;
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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”;
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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; and
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reviewing with management, the independent auditors, 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
Prior to the consummation of this offering, we will establish a compensation committee of the board of directors. Di-Ann Eisnor, Camillo Martino and Allen Salmasi will serve as members of our compensation committee. Di-Ann Eisnor will serve as chair of the compensation committee. Under Nasdaq listing standards and applicable SEC rules, we are required to have at least two members of the compensation committee, all of whom must be independent. Di-Ann Eisnor, Camillo Martino and Allen Salmasi meet the independent director standard under Nasdaq listing standards applicable to members of the compensation committee.
We will adopt a compensation committee charter, which details the principal functions of the compensation committee, including:
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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;
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reviewing and approving on an annual basis the compensation of all of our other officers;
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reviewing on an annual basis our executive compensation policies and plans;
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implementing and administering our incentive compensation equity-based remuneration plans;
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assisting management in complying with our proxy statement and annual report disclosure requirements;
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approving all special perquisites, special cash payments and other special compensation and benefit arrangements for our officers and employees;
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if required, producing a report on executive compensation to be included in our annual proxy statement; and
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reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors.
Notwithstanding the foregoing, as indicated above, other than reimbursement of expenses, no compensation of any kind, including finders, consulting or other similar fees, will be paid to any of our initial stockholders, officers, directors or any of their respective affiliates, prior to, or for any services they render in order to complete the consummation of a business combination, except that at the closing of our initial business combination, we may pay a customary financial consulting fee, which will not be made from the proceeds of this offering held in the trust account prior to the completion of our initial business combination. We may pay such financial consulting fee in the event such party or parties provide us with specific target company, industry, financial or market expertise, as well as insights, relationships, services or resources in order to assess, negotiate and consummate an initial business combination. The amount of any such financial consulting fee we pay will be based upon the prevailing market for similar services for comparable transactions at such time, and will be subject to the review of our audit committee pursuant to the audit committee’s policies and procedures relating to transactions that may present conflicts of interest. We would disclose any such fee in the proxy or tender offer materials used in connection with a proposed business combination. Accordingly, it is likely that prior to the consummation of an initial business combination, the compensation committee will only be responsible for the review and recommendation of any compensation arrangements to be entered into in connection with such initial business combination.
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 the Nasdaq and the SEC.
Nominating Committee
Prior to the consummation of this offering, we will establish a nominating committee of the board of directors, which will consist of Atif Rafiq, Allen Salmasi and Hassan Ahmed, each of whom is an independent director under Nasdaq listing standards. Atif Rafiq will serve as chair of the nominating committee. The nominating committee is responsible for overseeing the selection of persons to be nominated to serve on our board of directors. The nominating committee considers persons identified by its members, management, stockholders, investment bankers and others.
Guidelines for Selecting Director Nominees
The guidelines for selecting nominees, which are specified in the nominating committee charter, generally provide that persons to be nominated:
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should have demonstrated notable or significant achievements in business, education or public service;
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should possess the requisite intelligence, education and experience to make a significant contribution to the board of directors and bring a range of skills, diverse perspectives and backgrounds to its deliberations; and
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should have the highest ethical standards, a strong sense of professionalism and intense dedication to serving the interests of the stockholders.
The nominating committee will consider a number of qualifications relating to management and leadership experience, background and integrity and professionalism in evaluating a person’s candidacy for membership on the board of directors. The nominating committee may require certain skills or attributes, such as financial or accounting experience, to meet specific board needs that arise from time to time and will also consider the overall experience and makeup of its members to obtain a broad and diverse mix of board members. The nominating committee will not distinguish among nominees recommended by stockholders and other persons.
Compensation committee interlocks and insider participation
None of our officers currently serves, and in the past year have not served, as a member of the compensation committee of any entity that has one or more officers serving on our board of directors.
Code of ethics
Prior to the closing of this offering, we will adopt a Code of Ethics and Business Conduct (our “Code of Ethics”) applicable to our directors, officers and employees. We have filed a copy of our form of our Code of Ethics as an exhibit to the registration statement of which this prospectus forms a part. You will be able to review this document by accessing our public filings at the SEC’s website at www.sec.gov and on our website. In addition, a copy of our 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. Please 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 other entities pursuant to which such officer or director is or will
be required to present a business combination opportunity to such entities. 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 his or her fiduciary or contractual obligations to present such opportunity to such entity. Our officers and directors are also not required to commit any specified amount of time to our affairs, and, accordingly, will have conflicts of interest in allocating management time among various business activities, including identifying potential business combinations and monitoring the related due diligence.
We do not believe, however, that the fiduciary duties or contractual obligations of our officers or directors will materially affect our ability complete our business combination. Our 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.
Our sponsor, officers and directors (excluding independent directors) have agreed not to participate in the formation of, or become an officer or director of, any other special purpose acquisition company with a class of securities registered under the Exchange Act which has publicly filed a registration statement with the SEC until we have entered into a definitive agreement regarding our initial business combination or we have failed to complete our initial business combination within 18 months after the closing of this offering or during any Extension Period.
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 which 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.
➢
Our sponsor, officers, directors and the direct anchor investors have agreed to waive their redemption rights with respect to any founder shares and any public shares held by them in connection with the consummation of our initial business combination. Additionally, our sponsor, officers, directors and the direct anchor investors have agreed to waive their redemption rights with respect to any founder shares held by them if we fail to consummate our initial business combination within 18 months after the closing of this offering or during any Extension 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. If we do not complete our initial business combination within such allotted time period, the proceeds of the sale of the private placement warrants 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: (A) one year after the completion of our initial business combination and (B) subsequent to our initial business combination, (x) if the last reported sale price of our Class A common stock equals or exceeds $12.00 per share 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 on which we complete a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property. With certain limited exceptions, the private placement warrants, the warrants that may be issued upon conversion of working capital loans and the Class A common stock underlying such warrants, will not be transferable, assignable or salable by our sponsor or the direct anchor investors or their permitted transferees until 30 days after the completion of our initial business combination. Since our officers and directors may
directly or indirectly own common stock 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 complete our initial business combination.
➢
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.
➢
Our officers or directors may have a conflict of interest with respect to evaluating a business combination and financing arrangements as we may obtain loans from them or their affiliates to finance transaction costs in connection with an intended initial business combination. Up to $1,500,000 of such loans may be convertible into warrants at a price of $1.00 per warrant at the option of the lender. Such warrants would be identical to the private placement warrants, including as to exercise price, exercisability and exercise period.
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 may have similar legal obligations relating to presenting business opportunities meeting the above-listed criteria to multiple entities. Furthermore, our 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.
Below is a table summarizing the entities to which our executive officers and directors currently have fiduciary duties or contractual obligations:
|
Individual
|
|
|
Entity
|
|
|
Entity’s Business
|
|
|
Affiliation
|
|
|
Khurram Sheikh
|
|
|
Aijaad
|
|
|
Strategic Advisory Firm
|
|
|
Founder & CEO
|
|
|
Eric Zimits
|
|
|
Netzyn, Inc.
|
|
|
Network Solutions
|
|
|
Strategic Advisor
|
|
|
Hassan Ahmed
|
|
|
Vesper
Ciena Corp.
|
|
|
MEMS
Telecommunications
|
|
|
Member of the Board
Member of the Board
|
|
|
Di-Ann Eisnor
|
|
|
byCore
|
|
|
Construction Labor Market
|
|
|
Co-Founder & CEO
|
|
| |
|
|
Saia Inc.
|
|
|
Freight Shipping
|
|
|
Member of the Board
|
|
| |
|
|
Gray Area Foundation for the Arts
|
|
|
Nonprofit Organization
|
|
|
Member of the Board
|
|
| |
|
|
Obvious Ventures
|
|
|
Investment Firm
|
|
|
Venture Partner
|
|
|
Camillo Martino
|
|
|
MagnaChip Semiconductor
Sensera Ltd.
VVDN Technologies Pvt.
Ltd.
KeraCel Inc.
|
|
|
Semiconductors
IoT Solutions
Wireless Networking
Multi-material 3D Printing
|
|
|
Chairman
Member of the Board
Member of the Board
Member of the Board
|
|
|
Atif Rafiq
|
|
|
MGM Resorts International
|
|
|
Hospitality
|
|
|
President of Commercial and Growth
|
|
|
Allen Salmasi
|
|
|
Veea Inc.
NLabs Inc.
Ostendo, Inc
OncoSynergy Inc
Mimik Inc
|
|
|
Edge Computing
Investment Firm
Quantum Computing
Oncology
Hybrid Edge Applications
|
|
|
Founder & CEO
Chairman & CEO
Member of the Board
Chairman
Member of the Board
|
|
Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for one or more entities to which he or she has fiduciary, contractual or other obligations or duties, he or she will honor these obligations and duties to present such business combination opportunity to such entities first, and only present it to us if such entities reject the opportunity and he or she determines to present the opportunity to us. 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.
We do not believe, however, that the fiduciary, contractual or other obligations or duties of our officers or directors will materially affect our ability to complete our initial business combination. Our 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 target business that is affiliated with our initial stockholders, officers, or directors, or any of their respective affiliates. In the event we seek to complete our initial business combination with a target business that is affiliated with our initial stockholders, officers or directors, or any of their affiliates, we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm or another independent entity that commonly renders valuation opinions that our initial business combination is fair to us from a financial point of view.
In the event that we submit our initial business combination to our public stockholders for a vote, our sponsor, officers and directors have agreed to vote any founder shares and any public shares held by them in favor of our initial business combination.
Limitation on liability and indemnification of officers and directors
Our 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 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 certificate of incorporation. Our bylaws also will permit us to secure 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 purchase 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.
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 directors’ and officers’ liability insurance and the indemnification 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 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.
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 and directors; and
➢
all our executive officers and directors upon completion of this offering 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 numbers and percentages presented assume that the underwriters do not exercise their over-allotment option, that our sponsor forfeits an aggregate of 750,000 founder shares and that there are 25,000,000 shares of our common stock issued and outstanding after this offering. The table does not reflect any units that may be purchased in this offering, including through the directed unit program, as described under “Underwriting—Directed Unit Program.”
| |
|
|
Before Offering
|
|
|
After Offering
|
|
|
Name and Address of Beneficial Owner(1)
|
|
|
Number
of Shares
Beneficially
Owned(2)
|
|
|
Approximate
Percentage of
Outstanding
Common Stock
|
|
|
Number
of Shares
Beneficially
Owned(2)
|
|
|
Approximate
Percentage of
Outstanding
Common Stock(2)
|
|
|
KINS Capital LLC(3)
|
|
|
|
|
5,125,000 |
|
|
|
|
|
89.1% |
|
|
|
|
|
4,375,000 |
|
|
|
|
|
17.5% |
|
|
|
BlackRock, Inc.(4)
|
|
|
|
|
625,000 |
|
|
|
|
|
10.9% |
|
|
|
|
|
625,000 |
|
|
|
|
|
2.5% |
|
|
|
Khurram Sheikh(3)
|
|
|
|
|
5,125,000 |
|
|
|
|
|
89.1% |
|
|
|
|
|
4,375,000 |
|
|
|
|
|
17.5% |
|
|
|
Eric Zimits
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
Hassan Ahmed
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
Di-Ann Eisnor
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
Camillo Martino
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
Atif Rafiq
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
Allen Salmasi
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
All executive officers and directors as a group (7 individuals)
|
|
|
|
|
5,125,000 |
|
|
|
|
|
89.1% |
|
|
|
|
|
4,375,000 |
|
|
|
|
|
17.5% |
|
|
*
less than 1%.
(1)
Unless otherwise noted, the business address of each of the following entities or individuals is c/o KINS Technology Group Inc., Four Palo Alto Square, 3000 El Camino Real, Palo Alto, CA 94306.
(2)
Interests shown consist solely of founder shares, classified as shares of Class B common stock. Shares of Class B common stock are convertible into shares of Class A common stock on a one-for-one basis, subject to adjustment, as described in the section of this prospectus entitled “Description of Securities.”
(3)
KINS Capital LLC, our sponsor, is the record holder of the Class B common stock reported herein. The managing member of the sponsor is a limited liability company whose managing member is Mr. Sheikh. As such, Mr. Sheikh may be deemed to have beneficial ownership of the common stock held directly by our sponsor. Each of our independent directors is, directly or indirectly, a non-managing member of our sponsor.
(4)
Interests shown consist solely of founder shares, classified as shares of Class B common stock. The registered holders of the referenced shares are funds and accounts under management by BlackRock, Inc. BlackRock, Inc. is the ultimate parent holding company of such funds and accounts. On behalf of such funds and accounts, the applicable portfolio managers, as managing directors of such entities, have voting and investment power over the shares held by the funds and accounts which are the registered holders of the referenced shares. Such portfolio managers expressly disclaim beneficial ownership of all shares held by such funds and accounts. The address of such funds and accounts and such portfolio managers is 55 East 52nd Street, New York, NY 10055.
Immediately after this offering, our initial stockholders will beneficially own 20.0% of the then-issued and outstanding shares of our common stock (assuming they do not purchase any units in this offering). Each of our officers and directors is, directly or indirectly, a member of our sponsor, and of which Khurram P. Sheikh, our Chairman and Chief Executive Officer, is the managing member. If we increase or decrease the size of this offering, we will effect a stock dividend or a share contribution back to capital or other appropriate mechanism, as applicable, with respect to our Class B common stock immediately prior to the consummation of this offering in such amount as to maintain the number of founder shares at 20% of the issued and outstanding shares of our common stock upon the consummation of this offering. Because of this ownership block, our initial stockholders may be able to effectively influence the outcome of all matters requiring approval by our stockholders, including the election of directors, amendments to our certificate of incorporation and approval of significant corporate transactions, including approval of our initial business combination.
Our sponsor, officers and directors have agreed (A) to vote any shares owned by them in favor of any proposed business combination and (B) not to redeem any shares in connection with a stockholder vote to approve a proposed initial business combination or amendment to our certificate of incorporation. Our direct anchor investors have expressed to us an interest to purchase units in this offering and we have agreed to direct the underwriters to sell such units to our direct anchor investors. There can be no assurance that our direct anchor investors will acquire any units in this offering or what amount of equity our anchor investors will retain, if any, upon the consummation of our initial business combination. In the event that such direct anchor investors purchase such units (either in this offering or after) and vote them in favor of our initial business combination, it is possible that no votes from other public stockholders would be required to approve our initial business combination, depending on the number of shares that are present at the meeting to approve such transaction. As a result of the founder shares and private placement warrants that our direct anchor investors may hold (directly or indirectly), they may have different interests with respect to a vote on an initial business combination than other public stockholders. Our direct anchor investors will have the same rights to the funds held in the trust account with respect to the common stock underlying the units they may purchase in this offering as the rights afforded to our public stockholders.
Our officers and sponsor are deemed to be our “promoters” as such term is defined under the federal securities laws.
Restrictions on transfers of founder shares and private placement warrants
The founder shares and private placement warrants and any shares of Class A common stock issued upon conversion or exercise thereof are subject to transfer restrictions pursuant to lock-up provisions in a letter agreement with us to be entered into by our sponsor, officers and directors (or a subscription agreement in the case of each of the direct anchor investors). Those lock-up provisions provide that such securities are not transferable or salable (i) in the case of the founder shares, until the earlier of (A) one year after the completion of our initial business combination and (B) subsequent to our initial business combination, (x) if the last reported sale price of our Class A common stock equals or exceeds $12.00 per share 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 on which we complete a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property, and (ii) in the case of the private placement warrants, the warrants that may be issued upon conversion of working capital loans and the 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 initial
stockholders, officers or directors, any affiliates or family members of any of our initial stockholders, officers or directors or any affiliate of our initial stockholders, officers or directors, (b) in the case of an individual, by gift to a member of the individual’s immediate family, 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 securities were originally purchased; (f) in the event of our liquidation prior to the completion of our initial business combination; (g) by virtue of the laws of Delaware or the Sponsor’s limited liability company agreement, as amended, upon dissolution of the Sponsor; (h) in the event of the completion of our liquidation, merger, stock exchange or other similar transaction which results in all of our stockholders having the right to exchange their shares of Common Stock for cash, securities or other property subsequent to the completion of the initial Business Combination; or (i) in the case of the direct anchor investors, to such investors’ affiliates, or any investment fund or other entity controlled or managed by such investors, or to any investment manager or investment advisor of the direct anchor investors or an affiliate of any such investment manager or investment advisor; 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 and by the same agreements entered into by our initial stockholders with respect to such securities (including provisions relating to voting, the trust account and liquidation distributions described elsewhere in this prospectus).
Expressions of Interest
Our direct anchor investors have expressed to us an interest to purchase units in this offering and we have agreed to direct the underwriters to sell such units to our direct anchor investors. There can be no assurance that our direct anchor investors will acquire any units in this offering or what amount of equity our anchor investors will retain, if any, upon the consummation of our initial business combination. In the event that such direct anchor investors purchase such units (either in this offering or after) and vote them in favor of our initial business combination, it is possible that no votes from other public stockholders would be required to approve our initial business combination, depending on the number of shares that are present at the meeting to approve such transaction. As a result of the founder shares and private placement warrants that our direct anchor investors may hold (directly or indirectly), they may have different interests with respect to a vote on an initial business combination than other public stockholders.
Our direct anchor investors will have the same rights to the funds held in the trust account with respect to the common stock underlying the units they may purchase in this offering as the rights afforded to our public stockholders.
Additionally, certain investors identified by our sponsor may purchase units in this offering at the initial public offering price. The underwriters will not receive any underwriting discounts or commissions on the units purchased by such investors. In the event these investors purchase the units described above, such investors will have the same rights to the funds held in the trust account with respect to the common stock underlying the units they may purchase in this offering as the rights afforded to our public stockholders.
Certain Relationships and Related Party Transactions
In July 2020, we issued an aggregate of 5,750,000 founder shares in exchange for a capital contribution of $25,000. Prior to the initial investment in the company of $25,000, we had no assets, tangible or intangible. In October 2020, our sponsor forfeited 625,000 founder shares and the direct anchor investors purchased 625,000 founder shares for an aggregate purchase price of approximately $2,717, or approximately $0.004 per share. The number of founder shares issued was determined based on the expectation that such founder shares would represent 20% of the outstanding shares upon completion of this offering. If we increase or decrease the size of this offering, we will effect a stock dividend or a share contribution back to capital or other appropriate mechanism, as applicable, with respect to our Class B common stock immediately prior to the consummation of this offering in such amount as to maintain the number of founder shares at 20% of the issued and outstanding shares of our common stock upon the consummation of this offering. Up to an aggregate of 750,000 founder shares are subject to forfeiture by our initial stockholders depending on the extent to which the underwriters’ over-allotment option is exercised. The founder shares (including the Class A common stock issuable upon exercise thereof) may not, subject to certain limited exceptions, be transferred, assigned or sold by the holder.
Our sponsor and the direct anchor investors have committed, pursuant to a written agreement, to purchase an aggregate of 8,000,000 (or 8,900,000 if the underwriters’ over-allotment option is exercised in full) private placement warrants for a purchase price of $1.00 per warrant in a private placement that will occur simultaneously with the closing of this offering. Among the private placement warrants, 7,019,607 private placement warrants (or 7,919,607 private placement warrants if the underwriters’ over-allotment option is exercised in full) will be purchased by our sponsor and 980,393 private placement warrants will be purchased by the direct anchor investors. As such, our sponsor’s interest in this transaction is valued at between $7,019,607 and $7,919,607, depending on the number of private placement warrants purchased. Each private placement warrant entitles the holder to purchase one share of our Class A common stock at $11.50 per share, subject to adjustment as provided herein. The private placement warrants (and the Class A common stock issuable upon exercise of such warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold by the holder. There will be no redemption rights or liquidating distributions with respect to our founder shares or warrants, which will expire worthless if we fail to complete our business combination within the 18-month time period or during any Extension Period.
We will enter into an Administrative Services Agreement pursuant to which we will also pay our sponsor a total of $20,000 per month for office space, 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 18 months, our sponsor will be paid a total of $360,000 ($20,000 per month) for office space, administrative and support services and will be entitled to be reimbursed for any out-of-pocket expenses.
No compensation of any kind, including finder’s and consulting fees, will be paid by us to our sponsor, officers and directors, or any of their respective affiliates, for services rendered prior to or in connection with the completion of an initial business combination, except that at the closing of our initial business combination, we may pay any of such individuals or entities a customary financial consulting fee, which will not be made from the proceeds of this offering held in the trust account prior to the completion of our initial business combination. We may pay such financial consulting fee in the event such party or parties provide us with specific target company, industry, financial or market expertise, as well as insights, relationships, services or resources in order to assess, negotiate and consummate an initial business combination. The amount of any such financial consulting fee we pay will be based upon the prevailing market for similar services for comparable transactions at such time, and will be subject to the review of our audit committee pursuant to the audit committee’s policies and procedures relating to transactions that may present conflicts of interest. We would disclose any such fee in the proxy or tender offer materials used in connection with a proposed business combination. However, these individuals 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 by us to our initial stockholders, officers, directors or our or 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 direct anchor investors have expressed to us an interest to purchase units in this offering and we have agreed to direct the underwriters to sell such units to our direct anchor investors. There can be no assurance that our direct anchor investors will acquire any units in this offering or what amount of equity our anchor investors will retain, if any, upon the consummation of our initial business combination. In the event that such direct anchor investors purchase such units (either in this offering or after) and vote them in favor of our initial business combination, it is possible that no votes from other public stockholders would be required to approve our initial business combination, depending on the number of shares that are present at the meeting to approve such transaction. As a result of the founder shares and private placement warrants that our direct anchor investors may hold (directly or indirectly), they may have different interests with respect to a vote on an initial business combination than other public stockholders. Our direct anchor investors will have the same rights to the funds held in the trust account with respect to the common stock underlying the units they may purchase in this offering as the rights afforded to our public stockholders.
Additionally, in the event that we seek third-party equity financing in connection with our initial business combination, we have agreed to provide our direct anchor investors with the right to purchase an aggregate of 4 million shares of our Class A common stock and up to an aggregate of an additional 35% of any other shares of Class A common stock being issued with a maximum aggregate investment amount of $200 million (or such lesser amount of third-party equity financing as we determine to seek) on customary terms, but in no event with an aggregate discount less than $10 million.
Additionally, certain investors identified by our sponsor may purchase units in this offering at the initial public offering price. The underwriters will not receive any underwriting discounts or commissions on the units purchased by such investors. In the event these investors purchase the units described above, such investors will have the same rights to the funds held in the trust account with respect to the common stock underlying the units they may purchase in this offering as the rights afforded to our public stockholders.
Our sponsor has agreed to loan us up to $300,000 to be used for a portion of the expenses of this offering. This loan is non-interest bearing, unsecured and is due at the earliest of December 31, 2020, the closing of this offering and our determination not to proceed with the offering. The loan will be repaid upon the closing of this offering out of the offering proceeds not held in the trust account. As of September 30, 2020, there was $69,854 outstanding under the note.
In addition, in order to fund working capital deficiencies or finance transaction costs in connection with an intended initial business combination, our initial stockholders, officers or directors, may, but are not obligated to, loan us funds as may be required. If we complete our initial business combination, we may 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. In the event that our initial business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from our trust account would be used to repay such loaned amounts. Up to $1,500,000 of such loans may be convertible into warrants, at a price of $1.00 per warrant at the option of the lender. The warrants would be identical to the private placement warrants. Except as described above, the terms of such loans, if any, have not been determined and no written agreements exist with respect to such loans. Prior to the completion of our initial business combination, we do not expect to seek loans from parties other than our initial stockholders, officers or directors, 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 who remain with us, if any, 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 and director compensation.
We will enter into indemnification agreements with each of our officers and directors. 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.
We will enter into a registration rights agreement with respect to the founder shares, private placement warrants, and warrants that may be issued upon conversion of working capital loans (and their respective component securities) and the shares of Class A common stock issuable upon exercise of the foregoing and upon conversion of the founder shares, which is described under the section of this prospectus entitled “Description of Securities—Registration Rights.”
Directed Unit Program
The underwriters have reserved up to 5% of the units being offered by this prospectus for sale at the initial public offering price to our directors, officers, employees and other individuals associated with us and members of their families. The sales will be made by UBS Financial Services Inc., a selected dealer affiliated with UBS Securities LLC, an underwriter of this offering, through a directed unit program. We do not currently know the extent to which these related persons will participate in our directed unit program, if at all. We will offer these units to the extent permitted under applicable regulations.
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 will be 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 will be filed as an exhibit to the registration statement of which this prospectus is a part.
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 entity that is affiliated with any of our initial stockholders, officers or directors unless we, or a committee of independent directors, obtain an opinion from an independent investment
banking firm or another independent entity that commonly renders valuation opinions that our initial business combination is fair to us from a financial point of view. Furthermore, no finder’s fees, reimbursements or cash payments will be made to our sponsor, officers or directors, or our or 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 sponsor, officers or directors, or our or their affiliates, none of which will be made from the proceeds of this offering held in the trust account prior to the completion of our initial business combination:
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repayment of an aggregate of up to $300,000 in loans made to us by our sponsor to cover offering-related and organizational expenses;
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payment to our sponsor of a total of $20,000 per month, for up to 18 months, for office space, administrative and support services;
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reimbursement for any out-of-pocket expenses related to our formation and initial public offering and to identifying, investigating and completing an initial business combination; and
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repayment of loans which may be made by our initial stockholders, officers, directors, or their affiliates to 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 into warrants, at a price of $1.50 per warrant at the option of the lender.
These 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 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. Additionally, in connection with the successful completion of our initial business combination, we may determine to provide a payment to our sponsor, officers, directors, advisors, or our or their affiliates; however, any such payment would not be made from the proceeds of this offering held in the trust account and we currently do not have any arrangement or agreement with our sponsor, officers, directors, advisors, or our or their affiliates, to do so. Our audit committee will review on a quarterly basis all payments that were or are to be made to our sponsor, officers or directors, or our or their affiliates.
Description of Securities
Pursuant to our certificate of incorporation, our authorized capital stock consists of 200,000,000 shares of Class A common stock, $0.0001 par value, 20,000,000 shares of Class B common stock, $0.0001 par value, and 2,000,000 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-half 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 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 two units, you will not be able to receive or trade a whole warrant.
The Class A common stock and warrants comprising the units will begin separate trading on the 52nd day following the date of this prospectus (or, if such date is not a business day, the following business day) unless the Representatives informs us of decision (based upon, among other things, their assessment of the relative strengths of the securities markets, of comparably capitalized companies and of blank check companies in general, and the trading pattern of, and demand for, our securities in particular) 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. Additionally, we expect that the units will automatically separate into their component parts and will not be traded after completion of our initial business combination.
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 reflecting our receipt of the gross proceeds at the closing of this offering. We will file a Current Report on Form 8-K which includes this audited balance sheet promptly after the completion of this offering. 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, 25,000,000 shares of our common stock will be outstanding (assuming no exercise of the underwriters’ over-allotment option and the corresponding forfeiture of an aggregate of 750,000 founder shares by our sponsor), consisting of:
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20,000,000 shares of our Class A common stock underlying the units being offered in this offering; and
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5,000,000 shares of Class B common stock held by our initial stockholders.
If we increase or decrease the size of this offering, we will effect a stock dividend or a share contribution back to capital or other appropriate mechanism, as applicable, with respect to our Class B common stock immediately prior to the consummation of this offering in such amount as to maintain the number of founder shares at 20% of the issued and outstanding shares of our common stock upon the consummation of this offering.
Common stockholders of record are entitled to one vote for each share held on all matters to be voted on by stockholders; provided that, prior to the completion of our initial business combination, holders of our Class B common stock will have the right to elect all of our directors and remove members of our board of directors for any reason. Holders of the Class A common stock and holders of the Class B common stock will vote together as a single class on all matters submitted to a vote of our stockholders, except as required by law. Unless specified in our 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 shares of 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. Prior to the completion of our initial business combination, only holders of our Class B common stock will have the right to vote on the election of directors. Holders of our public shares will not be entitled to vote on the election of directors during such time. In addition, prior to the completion of our initial business combination, holders of a majority of the outstanding shares of our Class B common stock may remove a member of the board of directors for any reason. The provisions of our certificate of incorporation governing the appointment or removal of directors prior to our initial business combination may only be amended by a resolution passed by the holders of a majority of shares of our Class B common stock.
Because our certificate of incorporation authorizes the issuance of up to 200,000,000 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 Class A 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 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 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, calculated 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 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 $10.10 per public share. The per-share amount we will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting commissions we will pay to the underwriters. The redemption rights will include the requirement that a beneficial owner must identify itself in order to validly redeem its shares. Our sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to any founder shares and any public shares held by them in connection with the completion of our initial business combination. If a stockholder vote is not required by applicable law or stock exchange listing requirements and we do not decide to hold a stockholder vote for business or other reasons, we will, pursuant to our 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 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, stockholder approval of the transaction is required by applicable law or stock exchange listing requirements, 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.
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 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 any Excess Shares, without our consent. 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 sponsor, officers and directors have agreed to vote any founder shares and any public shares held by them in favor of our initial business combination. As a result, in addition to their founder shares, we would need only 7,500,001, or 37.5% (assuming all outstanding shares are voted), of the 20,000,000 public shares sold in this offering to be voted in favor of a transaction in order to have our initial business combination approved (assuming the underwriters’ over-allotment option is not exercised). However, because we generally only need a majority of the outstanding shares to be voted in favor of a proposed business combination to have such transaction approved, the number of public shares needed to be voted in favor of any transaction decreases as the overall number of public shares voted decreases. Accordingly, we would need only 1,250,001, or 6.25%, of the 20,000,000 public shares sold in this offering to be voted in favor of a transaction if only the minimum number of shares representing a quorum are voted in order to have our initial business combination approved (assuming the underwriters’ over-allotment option is not exercised). Additionally, each public stockholder may elect to redeem its public shares irrespective of whether they vote for or against the proposed transaction or do not vote at all (subject to the limitation described in the preceding paragraph).
Pursuant to our certificate of incorporation, if we have not completed our initial business combination within such time period or during any Extension Period, we 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 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 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); and (iii) 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 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 agreed to waive their rights to liquidating distributions from the trust account with respect to any founder shares held by them if we fail
to complete our initial business combination within 18 months from the closing of this offering or during any Extension Period. However, if our initial stockholders 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 complete our business combination within the allotted 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, upon the completion of our initial business combination, subject to the limitations described herein.
Founder shares
The founder shares are identical to the shares of Class A common stock included in the units being sold in this offering, and holders of founder shares have the same stockholder rights as public stockholders, except that (i) prior to the completion of our initial business combination, only holders of the Class B common stock have the right to vote on the election of directors and holders of a majority of the outstanding shares of our Class B common stock may remove members of our board of directors for any reason; (ii) the founder shares are subject to certain transfer restrictions, as described in more detail below, (iii) our sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have agreed to waive (A) their redemption rights with respect to any founder shares and any public shares held by them in connection with the completion of our initial business combination, (B) their redemption rights with respect to any founder shares and any public shares held by them in connection with a stockholder vote to approve an amendment to our certificate of incorporation (x) to modify the substance or timing of our obligation to allow redemption in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination within 18 months from the closing of this offering or (y) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity and (C) their rights to liquidating distributions from the trust account with respect to any founder shares held by them if we fail to complete our initial business combination within 18 months from the closing of this offering or during any Extension 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 such time period, (iv) the direct anchor investors have agreed to waive their right to liquidating distributions from the trust account with respect to any founder shares held by them if we fail to complete our business combination within 18 months from the closing of this offering and have also agreed to waive their redemption rights with respect to their founder shares, 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; (v) the founder shares are shares of our Class B common stock that will automatically convert into shares of our Class A common stock at the time of our initial business combination, or earlier at the option of the holder (except for any founder shares held by the direct anchor investors who have agreed not to effect a conversion with respect to such founder shares until the consummation of the initial business combination), on a one-for-one basis, subject to adjustment pursuant to certain anti-dilution rights as described herein and (vi) the holders are entitled to registration rights. If we submit our initial business combination to our public stockholders for a vote, our sponsor, officers and directors have agreed pursuant to the letter agreement to vote any founder shares and any public shares held by them in favor of our initial business combination. Permitted transferees of the founder shares and private placement warrants and their component securities will be subject to the same restrictions described herein applicable to the holders of such securities.
The shares of Class B 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 adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like,
and subject to further adjustment as described herein). In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in excess of the amounts issued in this offering and related to the closing of our initial business combination (including pursuant to a specified future issuance), the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the then-outstanding shares of Class B common stock agree to waive such adjustment with respect to any such issuance or deemed issuance, including pursuant to a specified future issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, on an as-converted basis, 20% of the sum of the total number of all shares of common stock outstanding upon the completion of this offering plus all 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 and excluding any shares or equity-linked securities issued or issuable to any seller in the initial business combination). We cannot determine at this time whether a majority of the holders of our Class B common stock at the time of any future issuance would agree to waive such adjustment to the conversion ratio. They may waive such adjustment due to (but not limited to) the following: (i) closing conditions which are part of the agreement for our initial business combination; (ii) negotiation with Class A stockholders on structuring an initial business combination; or (iii) negotiation with parties providing financing which would trigger the anti-dilution provisions of the Class B common stock. If such adjustment is not waived, the issuance would not reduce the percentage ownership of holders of our Class B common stock, but would reduce the percentage ownership of our public stockholders. If such adjustment is waived, the issuance would reduce the percentage ownership of holders of both classes of our common stock. Securities could be “deemed issued” for purposes of the conversion rate adjustment if such shares are issuable upon the conversion or exercise of convertible securities, warrants or similar securities.
With certain limited exceptions, the founder shares are not transferable, assignable or salable (except to affiliates of our sponsor, officers, directors or the direct anchor investors, 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 and (B) subsequent to our initial business combination, (x) if the last reported sale price of our Class A common stock equals or exceeds $12.00 per share 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 on which we complete a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property.
Prior to the completion of our initial business combination, only holders of our Class B common stock will have the right to vote on the election of directors. Holders of our public shares will not be entitled to vote on the election of directors during such time. In addition, prior to the completion of our initial business combination, holders of a majority of the outstanding shares of our Class B common stock may remove a member of the board of directors for any reason. These provisions of our certificate of incorporation may only be amended by a resolution passed by the holders of a majority of shares of our Class B common stock. With respect to any other matter submitted to a vote of our stockholders, including any vote in connection with our initial business combination, holders of the Class A common stock and holders of the Class B common stock will vote together as a single class on all matters submitted to a vote of our stockholders, except as required by law. Each share of common stock will have one vote on all such matters.
Preferred stock
Our certificate of incorporation 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.
Redeemable warrants
Public stockholders’ warrants
Each whole warrant entitles the registered holder to purchase one share of our Class A common stock at a price of $11.50 per share, subject to adjustment as discussed below, at any time commencing on the later of 12 months from the closing of this offering and 30 days after the completion of our initial business combination, except as described below. 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 two 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.
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 stock underlying the warrants is then effective and a prospectus relating thereto is current, subject to our satisfying our obligations described below with respect to registration. No warrant will be exercisable and we will not be obligated to issue shares of Class A common stock upon exercise of a warrant unless Class A common stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants. 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 no event will we be required to net cash settle any warrant. 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 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 20 business days after the closing of our initial business combination, we will use our commercially reasonable efforts to file, and within 60 business days following our initial business combination to have declared effective, a registration statement under the Securities Act covering the issuance of the shares of Class A common stock issuable upon exercise of the warrants. We will use our commercially reasonable efforts to maintain the effectiveness of such registration statement and a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed. 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 be required to use our commercially reasonable efforts to register or 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 redeem the outstanding warrants (except as described herein with respect to the private placement warrants):
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in whole and not in part;
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at a price of $0.01 per warrant;
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upon not less than 30 days’ prior written notice of redemption (the “30-day redemption period”) to each warrant holder; and
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if, and only if, the last reported sale price of the Class A common stock equals or exceeds $18.00 per share 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.
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. As a result, we may redeem the warrants as set forth above even if the holders are otherwise unable to exercise the warrants.
We have established the $18.00 per share (subject to adjustment) redemption criteria 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 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 well as the $11.50 (for whole shares) warrant exercise price after the redemption notice is issued.
If we call the warrants for redemption for cash as described above, our management will have the option to require any holder that wishes to exercise 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 lesser of (A) 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” of our Class A common stock (defined above) over the exercise price of the warrants by (y) the fair market value and (B) 0.361 shares of Class A common stock per warrant. The “fair market value” for this purpose shall mean the volume-weighted average price of the Class A common stock as reported during the 10 trading days immediately following 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 sponsor, the direct anchor investors 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.
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:
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in whole and not in part;
➢
at $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their warrants prior to redemption and receive that number of shares
of Class A common stock to be 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;
➢
if, and only if, the last reported sale price of our Class A common stock equals or exceeds $10.00 per share on the trading day prior to the date on which we send the notice of redemption to the warrant holders;
➢
if, and only if, the private placement warrants are also concurrently exchanged at the same price (equal to a number of shares of Class A common stock) as the outstanding public warrants, as described above; and
➢
if, and only if, there is an effective registration statement covering the issuance of the shares of Class A common stock (or a security other than the 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) issuable upon exercise of the warrants and a current prospectus relating thereto 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 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 volume-weighted average price of the Class A common stock as reported during the 10 trading days immediately following 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.
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. The numbers in the tables below will not be adjusted solely as a result of us not being the surviving entity following our initial business combination.
The stock prices set forth in the column headings of the table below will be adjusted as of any date on which the number of shares issuable upon exercise of a warrant is adjusted as set forth in the first three paragraphs under the heading “—Anti-dilution Adjustments” below. The adjusted stock prices in the column headings will 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 below shall be adjusted in the same manner and at the same time as the number of shares issuable upon exercise of a warrant.
|
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
|
|
|
59
|
|
|
|
|
0.236
|
|
|
|
|
|
0.257
|
|
|
|
|
|
0.277
|
|
|
|
|
|
0.295
|
|
|
|
|
|
0.311
|
|
|
|
|
|
0.325
|
|
|
|
|
|
0.338
|
|
|
|
|
|
0.350
|
|
|
|
|
|
0.361
|
|
|
|
57
|
|
|
|
|
0.233
|
|
|
|
|
|
0.255
|
|
|
|
|
|
0.275
|
|
|
|
|
|
0.293
|
|
|
|
|
|
0.309
|
|
|
|
|
|
0.324
|
|
|
|
|
|
0.338
|
|
|
|
|
|
0.350
|
|
|
|
|
|
0.361
|
|
|
|
54
|
|
|
|
|
0.229
|
|
|
|
|
|
0.251
|
|
|
|
|
|
0.272
|
|
|
|
|
|
0.291
|
|
|
|
|
|
0.307
|
|
|
|
|
|
0.323
|
|
|
|
|
|
0.337
|
|
|
|
|
|
0.350
|
|
|
|
|
|
0.361
|
|
|
|
51
|
|
|
|
|
0.225
|
|
|
|
|
|
0.248
|
|
|
|
|
|
0.269
|
|
|
|
|
|
0.288
|
|
|
|
|
|
0.305
|
|
|
|
|
|
0.321
|
|
|
|
|
|
0.336
|
|
|
|
|
|
0.349
|
|
|
|
|
|
0.361
|
|
|
|
48
|
|
|
|
|
0.220
|
|
|
|
|
|
0.243
|
|
|
|
|
|
0.265
|
|
|
|
|
|
0.285
|
|
|
|
|
|
0.303
|
|
|
|
|
|
0.320
|
|
|
|
|
|
0.335
|
|
|
|
|
|
0.349
|
|
|
|
|
|
0.361
|
|
|
|
45
|
|
|
|
|
0.214
|
|
|
|
|
|
0.239
|
|
|
|
|
|
0.261
|
|
|
|
|
|
0.282
|
|
|
|
|
|
0.301
|
|
|
|
|
|
0.318
|
|
|
|
|
|
0.334
|
|
|
|
|
|
0.348
|
|
|
|
|
|
0.361
|
|
|
|
42
|
|
|
|
|
0.208
|
|
|
|
|
|
0.234
|
|
|
|
|
|
0.257
|
|
|
|
|
|
0.278
|
|
|
|
|
|
0.298
|
|
|
|
|
|
0.316
|
|
|
|
|
|
0.333
|
|
|
|
|
|
0.348
|
|
|
|
|
|
0.361
|
|
|
|
39
|
|
|
|
|
0.202
|
|
|
|
|
|
0.228
|
|
|
|
|
|
0.252
|
|
|
|
|
|
0.275
|
|
|
|
|
|
0.295
|
|
|
|
|
|
0.314
|
|
|
|
|
|
0.331
|
|
|
|
|
|
0.347
|
|
|
|
|
|
0.361
|
|
|
|
36
|
|
|
|
|
0.195
|
|
|
|
|
|
0.222
|
|
|
|
|
|
0.247
|
|
|
|
|
|
0.271
|
|
|
|
|
|
0.292
|
|
|
|
|
|
0.312
|
|
|
|
|
|
0.330
|
|
|
|
|
|
0.346
|
|
|
|
|
|
0.361
|
|
|
|
33
|
|
|
|
|
0.187
|
|
|
|
|
|
0.215
|
|
|
|
|
|
0.241
|
|
|
|
|
|
0.266
|
|
|
|
|
|
0.288
|
|
|
|
|
|
0.309
|
|
|
|
|
|
0.328
|
|
|
|
|
|
0.345
|
|
|
|
|
|
0.361
|
|
|
|
30
|
|
|
|
|
0.179
|
|
|
|
|
|
0.208
|
|
|
|
|
|
0.235
|
|
|
|
|
|
0.261
|
|
|
|
|
|
0.284
|
|
|
|
|
|
0.306
|
|
|
|
|
|
0.326
|
|
|
|
|
|
0.345
|
|
|
|
|
|
0.361
|
|
|
|
27
|
|
|
|
|
0.170
|
|
|
|
|
|
0.199
|
|
|
|
|
|
0.228
|
|
|
|
|
|
0.255
|
|
|
|
|
|
0.280
|
|
|
|
|
|
0.303
|
|
|
|
|
|
0.324
|
|
|
|
|
|
0.343
|
|
|
|
|
|
0.361
|
|
|
|
24
|
|
|
|
|
0.159
|
|
|
|
|
|
0.190
|
|
|
|
|
|
0.220
|
|
|
|
|
|
0.248
|
|
|
|
|
|
0.274
|
|
|
|
|
|
0.299
|
|
|
|
|
|
0.322
|
|
|
|
|
|
0.342
|
|
|
|
|
|
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
|
|
|
21
|
|
|
|
|
0.148
|
|
|
|
|
|
0.179
|
|
|
|
|
|
0.210
|
|
|
|
|
|
0.240
|
|
|
|
|
|
0.268
|
|
|
|
|
|
0.295
|
|
|
|
|
|
0.319
|
|
|
|
|
|
0.341
|
|
|
|
|
|
0.361
|
|
|
|
18
|
|
|
|
|
0.135
|
|
|
|
|
|
0.167
|
|
|
|
|
|
0.200
|
|
|
|
|
|
0.231
|
|
|
|
|
|
0.261
|
|
|
|
|
|
0.289
|
|
|
|
|
|
0.315
|
|
|
|
|
|
0.339
|
|
|
|
|
|
0.361
|
|
|
|
15
|
|
|
|
|
0.120
|
|
|
|
|
|
0.153
|
|
|
|
|
|
0.187
|
|
|
|
|
|
0.220
|
|
|
|
|
|
0.253
|
|
|
|
|
|
0.283
|
|
|
|
|
|
0.311
|
|
|
|
|
|
0.337
|
|
|
|
|
|
0.361
|
|
|
|
12
|
|
|
|
|
0.103
|
|
|
|
|
|
0.137
|
|
|
|
|
|
0.172
|
|
|
|
|
|
0.207
|
|
|
|
|
|
0.242
|
|
|
|
|
|
0.275
|
|
|
|
|
|
0.306
|
|
|
|
|
|
0.335
|
|
|
|
|
|
0.361
|
|
|
|
9
|
|
|
|
|
0.083
|
|
|
|
|
|
0.117
|
|
|
|
|
|
0.153
|
|
|
|
|
|
0.191
|
|
|
|
|
|
0.229
|
|
|
|
|
|
0.266
|
|
|
|
|
|
0.300
|
|
|
|
|
|
0.332
|
|
|
|
|
|
0.361
|
|
|
|
6
|
|
|
|
|
0.059
|
|
|
|
|
|
0.092
|
|
|
|
|
|
0.130
|
|
|
|
|
|
0.171
|
|
|
|
|
|
0.213
|
|
|
|
|
|
0.254
|
|
|
|
|
|
0.292
|
|
|
|
|
|
0.328
|
|
|
|
|
|
0.361
|
|
|
|
3
|
|
|
|
|
0.030
|
|
|
|
|
|
0.060
|
|
|
|
|
|
0.100
|
|
|
|
|
|
0.145
|
|
|
|
|
|
0.193
|
|
|
|
|
|
0.240
|
|
|
|
|
|
0.284
|
|
|
|
|
|
0.324
|
|
|
|
|
|
0.361
|
|
|
|
0
|
|
|
|
|
0.000
|
|
|
|
|
|
0.000
|
|
|
|
|
|
0.042
|
|
|
|
|
|
0.115
|
|
|
|
|
|
0.179
|
|
|
|
|
|
0.233
|
|
|
|
|
|
0.281
|
|
|
|
|
|
0.324
|
|
|
|
|
|
0.361
|
|
|
| |
For example, if the volume-weighted average price of our Class A common stock as reported during the 10 trading days immediately following 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 0.233 shares of Class A common stock for each whole warrant. However, 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 an example where the exact fair market value and redemption date are not as set forth in the table above, if the volume-weighted average price of our Class A common stock for the 10 trading days immediately following 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 0.284 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. Once the average last reported sale price of our Class A common stock exceeds $18.00, we will have the option to redeem the warrants using this method or as described above under the heading “Redemption of warrants when the price per share of Class A common stock equals or exceeds $18.00.”
This redemption feature differs from the typical warrant redemption features used in 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 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 representing the applicable redemption price 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 with an additional mechanism by which to redeem all of the outstanding warrants, and therefore have certainty as to our capital structure. 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.
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. 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 exercised their warrants for shares of Class A common stock if and when the Class A common stock trades at a price higher than the exercise price of $11.50.
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.
Exercise Limitations. 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), 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.
Anti-Dilution Adjustments. 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 (i) 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 (ii) one (1) 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 (i) 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 (ii) fair market value means the volume weighted average price of Class A 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 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 certificate of incorporation (i) to modify the substance or timing of our obligation to allow redemption in connection with our initial business combination or to redeem 100% of our public shares if we have not completed our initial business combination within 18 months from the closing of this offering 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 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 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. 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 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 Black-Scholes 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 mistake or defective provision, contained therein but requires the approval by the holders of at least 50% of the then-outstanding public warrants to make any change that adversely affects the interests of the registered holders of public warrants and, solely with respect to any amendment to the terms of the private placement warrants or any provision of the warrant agreement with respect to the private placement warrants, 50% of the number of the then-outstanding private placement warrants.
In addition, if (x) we issue additional shares or equity-linked securities for capital raising purposes in connection with the closing of our initial business combination at a Newly Issued Price of less than $9.20 per share, (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 on the date of the consummation of our initial business combination (net of redemptions), and the Market Value is below $9.20 per share, then the exercise price of each warrant will be adjusted (to the nearest cent) such that the effective exercise price per full share will be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00 per-share redemption trigger price described under “—Redeemable Warrants—Public Stockholders’ Warrants—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 higher of the Market Value and the Newly Issued Price, and the $10.00 per-share redemption trigger price described under “—Redeemable Warrants—Public Stockholders' Warrants—Redemption of warrants when the price per share of Class A common stock equals or exceeds $10.00’’ will be adjusted (to the nearest cent) to be equal to the higher of the Market Value and the Newly Issued Price. This may make it more difficult for us to consummate an initial business combination with a target business.
The warrant holders do not have the rights or privileges of holders of Class A common stock or 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 (1) vote for each share held of record on all matters to be voted on by stockholders.
No fractional shares will be issued upon exercise of the warrants. If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest in a share, we will, upon exercise, round down to the nearest whole number of shares of Class A common stock to be issued to the warrant holder.
Private placement warrants
The private placement warrants (including the warrants that may be issued upon conversion of working capital loans and the Class A common stock issuable upon exercise of such warrants) will not be transferable, assignable or salable until 30 days after the completion of our initial business combination (except as described under the section of this prospectus entitled “Principal Stockholders—Restrictions on Transfers of Founder Shares and Private Placement Warrants,” each of which will be subject to the same transfer restrictions) and they will not be redeemable by us so long as they are held by our sponsor, the direct anchor investors or their permitted transferees (except as described under “Description of Securities—Redeemable Warrants—Public Stockholders’ Warrants—Redemption of warrants when the price per share of Class A common stock equals or exceeds $10.00”). Our sponsor or its permitted transferees, have the option to exercise the private placement warrants on a cashless basis and our sponsor, the direct anchor investors and their permitted transferees will also have certain registration rights related to the private placement warrants (including the shares of Class A common stock issuable upon exercise of the private placement warrants), as described below. 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, including as to exercise price, exercisability and exercise period. If the private placement warrants are held by holders other than our sponsor, the direct anchor investors 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. Each of the warrants that may be issued upon conversion of working capital loans shall be identical to the private placement warrants.
If holders of the private placement warrants elect to exercise them on a cashless basis other than in connection with the above $10.00 redemption, they would pay the exercise price by surrendering their warrants for that number of shares of Class A common stock 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 “private warrant fair market value” (defined below) over the exercise price of the warrants by (y) the private warrant fair market value. The “private warrant 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 warrant exercise is sent to the warrant agent. The reason that we have agreed that these warrants will be exercisable on a cashless basis so long as they are held by our sponsor, the direct anchor investors or their permitted transferees is because it is not known at this time whether they will be affiliated with us following an initial 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 sell the shares of Class A common stock issuable upon exercise of the warrants freely in the open market, the insiders could be significantly restricted from doing so. 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 finance transaction costs in connection with an intended initial business combination, our sponsor, officers and directors, may, but are not obligated to, loan us funds as may be required. Up to $1,500,000 of such loans may be convertible into warrants, at a price of $1.00 per warrant at the option of the lender. The warrants would be identical to the private placement warrants.
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. 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. If we increase the size of this offering, we will effect a stock dividend or other appropriate mechanism with respect to our Class B common stock immediately prior to the consummation of this offering in such amount as to maintain the number of founder shares at 20% of the issued and outstanding shares of our common stock upon the consummation of this offering.
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 claims and losses 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 certificate of incorporation
Our 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 outstanding common stock; provided that amendments relating to the appointment or removal of directors prior to our initial business combination require a resolution passed by the holders of a majority of shares of our Class B common stock. Our initial stockholders, who will collectively beneficially own 20.0% of our common stock upon the closing of this offering (assuming they do not purchase any units in this offering), may participate in any vote to amend our certificate of incorporation and will have the discretion to vote in any manner they choose. Specifically, our certificate of incorporation provides, among other things, that:
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If we have not completed our initial business combination within 18 months from the closing of this offering or during any Extension Period, we 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 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 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); and (iii) 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 in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law;
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We may not issue additional securities that would entitle the holders thereof, prior to our initial business combination, to (1) receive funds from the trust account or (2) vote as a class with our public shares (a) on any initial business combination or (b) to approve an amendment to our certificate of incorporation;
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In the event we seek to complete our initial business combination with a business that is affiliated with our initial stockholders, officers or directors, or any of their affiliates, we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm or
another independent entity that commonly renders valuation opinions that our initial business combination is fair to us from a financial point of view;
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If a stockholder vote on our initial business combination is not required by applicable law or stock exchange listing 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;
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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 assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the income earned on the trust account) at the time of the agreement to enter into the initial business combination;
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If our stockholders approve an amendment to our certificate of incorporation (i) to modify the substance or timing of our obligation to allow redemption in connection with our initial business combination or any amendments to our certificate of incorporation specified in this paragraph or to redeem 100% of our public shares if we do not complete our initial business combination within 18 months from the closing of this offering or (ii) with respect to any other provisions relating to stockholders’ rights or pre-initial business combination activity, we will provide our public stockholders with the opportunity to redeem all or a portion of their shares of Class A 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 taxes, divided by the number of then outstanding public shares;
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We will not complete our initial business combination solely with another blank check company or a similar company with nominal operations; and
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Prior to the completion of our initial business combination, only holders of the Class B common stock have the right to vote on the election of directors and holders of a majority of the outstanding shares of our Class B common stock may remove members of our board of directors.
In addition, our certificate of incorporation will provide that we will only redeem our public shares so long as (after such redemption) our net tangible assets will be at least $5,000,001 either immediately prior to or upon consummation of our initial business combination.
Certain anti-takeover provisions of Delaware law and our 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:
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a stockholder who owns 15% or more of our outstanding voting stock (otherwise known as an “interested stockholder”);
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an affiliate of an interested stockholder; or
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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:
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our board of directors approves the transaction that made the stockholder an “interested stockholder,” prior to the date of the transaction;
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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
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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 certificate of incorporation will provide that our board of directors will be classified into three classes of directors. As a result, in most circumstances, a person can gain control of our board only by successfully engaging in a proxy contest at two or more annual meetings. In addition, prior to the completion of our initial business combination, only holders of the Class B common stock have the right to vote on the election of directors and holders of a majority of the outstanding shares of our Class B common stock may remove members of our board of directors for any reason, which provisions of our amended and restated certificate of incorporation may only be amended by a resolution passed by the holders of a majority of shares of our Class B common stock.
Our authorized but unissued common stock and preferred stock are available for future issuances without stockholder approval (including a specified future issuance) 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 certificate of incorporation will provide that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for any (1) derivative action or proceeding brought on behalf of our company, (2) action asserting a claim of breach of a fiduciary duty owed by any director, officer, employee or agent of our company to our company or our stockholders, or any claim for aiding and abetting any such alleged breach, (3) action asserting a claim against our company or any director, officer or employee of our company arising pursuant to any provision of the DGCL or our amended and restated certificate of incorporation or our bylaws, or (4) action asserting a claim against us or any director, officer or employee of our company governed by the internal affairs doctrine except for, as to each of (1) through (4) above, any claim (A) as to which the Court of Chancery determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination) or (B) which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery. Notwithstanding the foregoing, the provisions of this paragraph will not apply to suits brought to enforce any liability or duty created by the Securities Act or the Exchange Act or otherwise arising under federal securities laws, for which the federal district courts of the United States of America shall be the sole and exclusive forum. 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, officers, other employees or stockholders. Furthermore, the enforceability of choice of forum provisions in other companies’ certificates of incorporation has been challenged in legal proceedings, and it is possible that a court could find these types of provisions to be inapplicable or unenforceable.
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.
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. Pursuant to Rule 14a-8 of the Exchange Act, proposals seeking inclusion in our annual proxy statement must comply with the notice periods contained therein. 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.
Action by written consent
Subsequent to the consummation of the offering, any action required or permitted to be taken by our common stockholders must be effected by a duly called annual or special meeting of such stockholders and may not be effected by written consent of the stockholders other than with respect to our Class B common stock.
Classified board of directors
Our board of directors will initially be divided into three classes, Class I, Class II and Class III, with members of each class serving staggered three-year terms. Our certificate of incorporation will provide that the authorized number of directors may be changed only by resolution of the board of directors. Subject to the terms of any preferred stock, any or all of the directors may be removed from office at any time, but only for cause and only by the affirmative vote of holders of a majority of the voting power of all then outstanding shares of our capital stock entitled to vote generally in the election of directors, voting together as a single class. Any vacancy on our board of directors, including a vacancy resulting from an enlargement of our board of directors, may be filled only by vote of a majority of our directors then in office.
Class B common stock consent right
For so long as any shares of Class B common stock remain outstanding, we may not, without the prior vote or written consent of the holders of a majority of the shares of Class B common stock then outstanding, voting separately as a single class, amend, alter or repeal any provision our certificate of incorporation, whether by merger, consolidation or otherwise, if such amendment, alteration or repeal would alter or change the powers, preferences or relative, participating, optional or other or special rights of the Class B common stock. Any action required or permitted to be taken at any meeting of the holders of Class B common stock may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of the outstanding Class B common stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares of Class B common stock were present and voted.
Securities eligible for future sale
Immediately after the consummation of this offering (assuming no exercise of the underwriters’ over-allotment option) we will have 25,000,000 (or 28,750,000 if the underwriters’ over-allotment option is exercised in full) shares of common stock outstanding. Of these shares, the 20,000,000 shares (or 23,000,000 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 of the remaining shares and all private placement warrants are restricted securities under Rule 144, in that they were issued in private transactions not involving a public offering, and the shares of Class B common stock and private placement warrants are subject to transfer restrictions as set forth elsewhere in this prospectus. These restricted securities will be subject to registration rights as more fully described below under “—Registration Rights.”
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 (i) 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 (ii) 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:
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1% of the total number of shares of common stock then outstanding, which will equal 250,000 shares immediately after this offering (or 287,500 if the underwriters exercise their over-allotment option in full); or
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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 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:
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the issuer of the securities that was formerly a shell company has ceased to be a shell company;
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the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act;
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the issuer of the securities has filed all Exchange Act reports and materials 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 Current Reports on Form 8-K; and
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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, our initial stockholders will be able to sell their founder 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
We will enter into a registration rights agreement with the holders of the founder shares and private placement warrants. The holders will have registration rights to require us to register the sale of any of our securities held by them pursuant to a registration rights agreement to be signed prior to or on the effective date of this offering. The holders of at least 30% in interest of these securities will be entitled to make up to three demands, excluding short form registration demands, that we register such securities for sale under the Securities Act. In addition, these holders will have certain “piggy-back” registration rights to include their securities in other 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. 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 on Nasdaq under the symbol “KINZ.U” on or promptly after the date of this prospectus. Following the date the shares of our Class A common stock and public warrants are eligible to trade separately, we anticipate that our Class A common stock and public warrants will be separately listed in the Nasdaq under the symbols “KINZ” and “KINZ WS”, respectively.
United States Federal Income Tax Considerations
The following is a discussion of U.S. federal income tax considerations generally applicable to the ownership and disposition of our units, shares of Class A common stock and warrants, which we refer to collectively as our securities. Because the components of a unit are separable at the option of the holder, the holder of a unit generally should be treated, for U.S. federal income tax purposes, as the owner of the underlying Class A common stock and one-half of one redeemable warrant components of the unit, as the case may be. As a result, the discussion below with respect to actual holders of Class A common stock and warrants should also apply to holders of units (as the deemed owners of the underlying Class A common stock and warrants that comprise the units). This discussion applies only to securities that are held as capital assets for U.S. federal income tax purposes and is applicable only to holders who purchased units in this offering.
This discussion is a summary only and does not describe all of the tax consequences that may be relevant to you in light of your particular circumstances, including but not limited to the alternative minimum tax, the Medicare tax on certain investment income and the different consequences that may apply if you are subject to special rules that apply to certain types of investors, including but not limited to:
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financial institutions or financial services entities;
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broker-dealers;
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governments or agencies or instrumentalities thereof;
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regulated investment companies;
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real estate investment trusts;
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expatriates or former long-term residents of the United States;
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persons that actually or constructively own five percent or more of our voting shares;
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insurance companies;
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taxpayers subject to a mark-to-market method of accounting with respect to the securities;
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persons holding the securities as part of a “straddle,” hedge, integrated transaction or similar transaction;
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U.S. holders (as defined below) whose functional currency is not the U.S. dollar;
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partnerships or other pass-through entities for U.S. federal income tax purposes and any beneficial owners of such entities; and
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tax-exempt entities.
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 is based on the Internal Revenue Code of 1986, as amended (the “Code”), and administrative pronouncements, judicial decisions and final, temporary and proposed Treasury
regulations as of the date hereof, which are subject to change, possibly on a retroactive basis, and changes to any of which subsequent to the date of this prospectus may affect the tax consequences described herein. This discussion does not address any aspect of state, local or non-U.S. taxation, or any U.S. federal taxes other than income taxes (such as gift and estate taxes).
We have not sought, and will not seek, a ruling from the IRS as to any U.S. federal income tax consequence described herein. The IRS may disagree with the discussion herein, and its determination may be upheld by a court. Moreover, there can be no assurance that future legislation, regulations, administrative rulings or court decisions will not adversely affect the accuracy of the statements in this discussion. You are urged to consult your tax advisor with respect to the application of U.S. federal tax laws to your particular situation, as well as any tax consequences arising under the laws of any state, local or foreign jurisdiction.
Personal holding company status
We could 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 (i) 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 (ii) 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. In addition, depending on the concentration of our stock in the hands of individuals, including the members of our initial stockholders and certain tax-exempt organizations, pension funds and charitable trusts, it is possible that more than 50% of our stock may be owned or deemed owned (pursuant to the constructive ownership rules) by such persons during the last half of a taxable year. Thus, no assurance can be given that we will not be 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.
Allocation of purchase price and characterization of a unit
No statutory, administrative or judicial authority directly addresses the treatment of a unit or instruments similar to a unit for U.S. federal income tax purposes and, therefore, that 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-half of one warrant to acquire one share of our Class A common stock. For U.S. federal income tax purposes, each holder of a unit must allocate the purchase price paid by such holder for such unit between the one share of Class A common stock and the one-half of one warrant based on the relative fair market value of each at the time of issuance. Under U.S. federal income tax law, each investor must make his or her own determination of such value based on all the relevant facts and circumstances. Therefore, we strongly urge each investor to consult his or her tax advisor regarding the determination of value for these purposes. The price allocated to each share of Class A common stock and the one-half of one warrant should be the stockholder’s tax basis in such share or one-half of one warrant, as the case may be. Any disposition of a unit should be treated for U.S. federal income tax purposes as a disposition of the share of Class A common stock and one-half of one warrant comprising the unit, and the amount realized on the disposition should be allocated between the Class A common stock and the one-half of one warrant based on their respective relative fair market values (as determined by each such unit holder on all the relevant facts and circumstances) at the time of disposition. The separation of shares of Class A common stock and warrants comprising units should not be a taxable event for U.S. federal income tax purposes.
The foregoing treatment of the shares of Class A common stock and warrants and a holder’s purchase price allocation are not binding on the Internal Revenue Service (“IRS”) or the courts. Because there are no authorities that directly address 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. Accordingly, each prospective investor is urged to consult its own tax advisors regarding the tax consequences of an investment in a unit (including alternative characterizations of a unit). The balance of this discussion assumes that the characterization of the units described above is respected for U.S. federal income tax purposes.
U.S. Holders
This section applies to you if you are a “U.S. holder.” A U.S. holder is a beneficial owner of our units, shares of Class A common stock or warrants who or that is, for U.S. federal income tax purposes:
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an individual who is a citizen or resident of the United States;
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a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) organized in or under the laws of the United States, any state thereof or the District of Columbia;
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an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or
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a trust, if (i) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons (as defined in the Code) have authority to control all substantial decisions of the trust or (ii) it has a valid election in effect under Treasury Regulations to be treated as a United States person.
Taxation of Distributions. If we pay distributions in cash or other property (other than certain distributions of our stock or rights to acquire our stock) to U.S. holders of shares of our Class A common stock, such distributions will generally 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 and Warrants” 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 generally will constitute “qualified dividends” that will be subject to tax at preferential long-term capital gains rates. 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. If the holding period requirements are not satisfied, then a corporation may not be able to qualify for the dividends received deduction and would have taxable income equal to the entire dividend amount, and non-corporate holders may be subject to tax on such dividend at regular ordinary income tax rates instead of the preferential rate that applies to qualified dividend income.
Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of Class A Common Stock and Warrants. Upon a sale or other taxable disposition of our Class A common stock or warrants which, in general, would include a redemption of Class A common stock or warrants that is treated as a sale of such securities as described below, and including as a result of a dissolution and liquidation in the event we do not consummate an initial business combination within the required time period, a U.S. holder
generally will recognize capital gain or loss in an amount equal to the difference between the amount realized and the U.S. holder’s adjusted tax basis in the Class A common stock or warrants. Any such capital gain or loss generally will be long-term capital gain or loss if the U.S. holder’s holding period for the Class A common stock or warrants 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. If the running of the holding period for the Class A common stock is suspended, then non-corporate U.S. holders may not be able to satisfy the one-year holding period requirement for long-term capital gain treatment, in which case any gain on a sale or taxable disposition of the shares or warrants would be subject to short-term capital gain treatment and would be taxed at regular ordinary income tax rates. Long-term capital gains recognized by non-corporate U.S. holders will be eligible to be taxed at reduced rates. The deductibility of capital losses is subject to limitations.
Generally, the amount of gain or loss recognized by a U.S. holder is an amount equal to the difference between (i) 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 or warrants are held as part of units at the time of the disposition, the portion of the amount realized on such disposition that is allocated to the Class A common stock or the warrants based upon the then fair market values of the Class A common stock and the warrants included in the units) and (ii) the U.S. holder’s adjusted tax basis in its Class A common stock or warrants so disposed of. A U.S. holder’s adjusted tax basis in its Class A common stock or warrants generally will 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 one-half of one warrant or, as discussed below, the U.S. holder’s initial basis for Class A common stock received upon exercise of warrants) less, in the case of a share of Class A common stock, any prior distributions treated as a return of capital.
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 the section of this prospectus entitled “Description of Securities—Common Stock” or if we purchase a U.S. holder’s Class A common stock in an open market transaction (each of which we refer to as a “redemption”), the treatment of the transaction for U.S. federal income tax purposes will depend on whether the redemption qualifies as a sale of the Class A common stock under Section 302 of the Code. If the redemption qualifies as a sale of common stock under the tests described below, the U.S. holder 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 and Warrants” above. If the redemption does not qualify as a sale of common stock, the U.S. holder will be treated as receiving a corporate distribution with the tax consequences described above under “U.S. Holders—Taxation of Distributions”. Whether a redemption qualifies for sale treatment will depend largely 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) relative to all of our shares outstanding 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 (i) is “substantially disproportionate” with respect to the U.S. holder, (ii) results in a “complete termination” of the U.S. holder’s interest in us or (iii) 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 Class A common stock which could be acquired pursuant to the exercise of the warrants. In order to meet the substantially disproportionate test, the percentage of our outstanding voting stock actually and constructively owned by the U.S. holder immediately following the redemption of Class A common stock must, among other requirements, be less than 80% of the percentage of our outstanding voting stock actually and constructively owned by the U.S. holder immediately before the redemption. Prior to our initial business combination, the Class A common stock
may not be treated as voting stock for this purpose and, consequently, this substantially disproportionate test may not be applicable. There will be a complete termination of a U.S. holder’s interest if either (i) all of the shares of our stock actually and constructively owned by the U.S. holder are redeemed or (ii) 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 shares of our 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.
However, 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 should consult with its own tax advisors as to the tax consequences of a redemption.
If none of the foregoing tests is satisfied, then the redemption will be treated as a corporate distribution and the tax effects will be as 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 will 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 Lapse or Redemption of a Warrant. Except as discussed below with respect to the cashless exercise of a warrant, a U.S. holder will generally not recognize taxable gain or loss on the acquisition of common stock upon exercise of a warrant for cash. 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 “—Allocation of Purchase Price and Characterization of a Unit”) and the exercise price. It is unclear whether the U.S. holder’s holding period for the Class A common stock received upon exercise of the warrants will begin on the date following the date of exercise or on the date of exercise of the warrants; in either case, the holding period will not include the period during which the U.S. holder held the warrants. If a warrant is allowed to lapse unexercised, a U.S. holder generally will recognize a capital loss equal to such holder’s tax basis in the warrant.
The tax consequences of a cashless exercise of a warrant are not clear under current tax law. A cashless exercise may be tax-free, 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 tax-free situation, a U.S. holder’s basis in the Class A common stock received would equal the holder’s basis in the warrants exercised therefor. If the cashless exercise were treated as not being a realization event, it is unclear whether a U.S. holder’s holding period in the Class A common stock would be treated as commencing on the date of exercise of the warrant or the day following the date of exercise of the warrant. If the cashless exercise were treated as a recapitalization, the holding period of the Class A common stock would include the holding period of the warrants exercised therefor.
It is also possible that a cashless exercise could be treated in whole or in part as a taxable exchange in which gain or loss would be recognized. In such event, a U.S. holder could be deemed to have surrendered a number of warrants having an aggregate fair market value equal to the exercise price for the total number of warrants to be exercised. 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 received in respect of the warrants deemed surrendered and the U.S. holder’s tax basis in such warrants. Such gain or loss would be long-term or short-term, depending on the U.S. holder’s holding period 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 a unit that is allocated to the warrant, as described above
under “—Allocation of Purchase Price and Characterization of a Unit”) 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 following the date of exercise or on the date of exercise of the warrant; in either case, the holding period would not include the period during which the U.S. holder held the warrant. There may also be alternative characterizations of any such taxable exchange that would result in similar tax consequences, except that a U.S. Holder’s gain or loss would be short-term.
Because of 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 should consult their tax advisors regarding the tax consequences of a cashless exercise.
If we provide notice that we will redeem warrants for $0.10 as described in the section entitled “Description of Securities—Redeemable Warrants—Public Stockholders’ Warrants—Redemption of warrants when the price per share of Class A common stock equals or exceeds $10.00” and a U.S. Holder exercises its warrant on a cashless basis and receives the amount of shares of Class A common stock as determined by reference to the table set forth therein, we intend to treat such exercise as a redemption of warrants for shares of Class A common stock for U.S. federal income tax purposes. While not free from doubt, such redemption should be treated as a “recapitalization” for U.S. federal income tax purposes. Accordingly, a U.S. holder should not recognize any gain or loss on the redemption of warrants for shares of Class A common stock. In such event, a U.S. holder’s aggregate tax basis in the shares of Class A common stock received in the redemption generally should equal the U.S. holder’s aggregate tax basis in the warrants redeemed and the holding period for the shares of Class A common stock received should include the U.S. holder’s holding period for the surrendered warrants. However, there is some uncertainty regarding this tax treatment and it is possible such a redemption could be treated in part as a taxable exchange in which gain or loss would be recognized in a manner similar to that discussed above for a cashless exercise of warrants, or otherwise characterized. Accordingly, a U.S. holder is urged to consult its tax advisor regarding the tax consequences of a redemption of warrants for shares of Class A common stock.
If we redeem warrants for cash pursuant to the redemption provisions described in the section of this prospectus entitled “Description of Securities—Redeemable Warrants—Public Stockholders’ Warrants—Redemption of warrants when the price per share of Class A common stock equals or exceeds $10.00” or if we purchase warrants in an open market transaction, such redemption or purchase generally will be treated as a taxable disposition to the U.S. holder, taxed as described above under “—Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of Class A Common Stock and Warrants.”
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 entitled “Description of Securities—Redeemable Warrants—Public Stockholders’ Warrants.” An adjustment which has the effect of preventing dilution generally is not taxable. The U.S. holders of the warrants would, however, be treated as receiving a constructive distribution from us if, for example, the adjustment to the number of such shares or to such exercise price increases the warrant holders’ 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 or through a decrease in the exercise price of the warrant) as a result of a distribution of cash or other property, such as other securities, to the holders of shares of our Class A common stock, or as a result of the issuance of a stock dividend to holders of shares of our Class A common stock, in each case which is taxable to the U.S. holders of such shares as a distribution. Such constructive distribution would be subject to tax in the same manner as if the U.S. holders of the warrants received a cash distribution from us equal to the fair market value of such increased interest resulting from the adjustment.
Non-U.S. Holders
This section applies to you if you are a “Non-U.S. holder.” As used herein, the term “Non-U.S. holder” means a beneficial owner of our units, Class A common stock or warrants who or that is for U.S. federal income tax purposes:
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a non-resident alien individual (other than certain former citizens and residents of the United States subject to U.S. tax as expatriates);
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a foreign corporation or
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an estate or trust that is not a U.S. holder;
but generally does not include an individual who is present in the United States for 183 days or more in the taxable year of disposition. If you are such an individual, you should consult your tax advisor regarding the U.S. federal income tax consequences of the acquisition, ownership or sale or other disposition of our securities.
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). 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 sales 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.
The 30% withholding tax does not apply to dividends paid to a Non-U.S. holder who provides a Form W-8ECI, certifying that the dividends are effectively connected with the Non-U.S. holder’s conduct of a trade or business within the United States. Instead, the effectively connected dividends will be subject to regular U.S. federal income tax as if the Non-U.S. holder were a United States resident, subject to an applicable income tax treaty providing otherwise. A Non-U.S. corporation receiving effectively connected dividends may also be subject to an additional “branch profits tax” imposed at a rate of 30% (or a lower applicable treaty rate).
Gain on Sale, Taxable 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 18 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:
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the gain is effectively connected with the conduct of a trade or business by the Non-U.S. holder within the United States (and, under certain income tax treaties, is attributable to a United States permanent establishment or fixed base maintained by the Non-U.S. holder); or
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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.
Unless an applicable treaty provides otherwise, gain described in the first bullet point above will be subject to tax at generally applicable U.S. federal income tax rates as if the Non-U.S. holder were a United States resident. 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 treaty rate).
If the second 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. federal 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 percent 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.
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 generally will 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, Taxable Exchange or Other Taxable Disposition of Class A Common Stock and Warrants,” as applicable.
Exercise, Lapse or Redemption of a Warrant. The characterization for U.S. federal income purposes of the redemption, exercise or lapse of a Non-U.S. holder’s warrant will generally correspond to the characterization described under “U.S. holders—Exercise, Lapse or Redemption of a Warrant” above, although to the extent a cashless exercise or redemption results in a taxable exchange, the consequences would be similar to those described above in “Non-U.S.Holders—Gain on Sale, Taxable Exchange or Other Taxable Disposition of Class A Common Stock and Warrants.”
The U.S. federal income tax treatment for a Non-U.S. holder of a redemption of warrants for cashdescribed in the section of this prospectus entitled “Description of Securities—RedeemableWarrants—Public Stockholders’ Warrants—Redemption of warrants when the price per share of Class Acommon stock equals or exceeds $10.00” (or if we purchase warrants in an open market transaction)would be similar to those described above in “Non-U.S. Holders—Gain on Sale, Taxable Exchange orOther Taxable Disposition of Class A Common Stock and Warrants.”
Possible Constructive Distributions. The terms of each warrant provide for an adjustment to the numberof shares of Class A common stock for which the warrant may be exercised or to the exercise price of thewarrant in certain events, as discussed in the section of this prospectus entitled “Description
ofSecurities—Redeemable Warrants—Public Stockholders’ Warrants.” An adjustment which has the effectof preventing dilution generally is not taxable. The Non-U.S. holders of the warrants would, however, betreated as receiving a constructive distribution from us if, for example, the adjustment to the number ofsuch shares or to such exercise price increases the warrantholders’ proportionate interest in our assetsor earnings and profits (e.g., through an increase in the number of shares of Class A common stock thatwould be obtained upon exercise or through a decrease in the exercise price of the warrant) as a result ofa distribution of cash or other property, such as other securities, to the holders of shares of our Class Acommon stock, or as a result of the issuance of a stock dividend to holders of shares of our Class Acommon stock, in each case which is taxable to the holders of such shares as a distribution. Suchconstructive distribution would be subject to tax in the same manner as if the Non-U.S. holders of thewarrants received a cash distribution from us equal to the fair market value of such increased interestresulting from the adjustment.
FATCA Withholding Taxes. 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. All prospective investors should consult their tax advisors regarding the possible implications of FATCA on their investment in our securities.
Underwriting
UBS Securities LLC, Stifel, Nicolaus & Company, Incorporated and BTIG, LLC are acting as joint-book running managers of this offering and as representatives of the underwriters named below. Subject to the terms and conditions of the underwriting agreement dated the date of this prospectus, each underwriter named below has severally agreed to purchase, and we have agreed to sell to such underwriter, the number of units set forth opposite the underwriter’s name.
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Underwriter
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Number of
Units
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UBS Securities LLC
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Stifel, Nicolaus & Company, Incorporated
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BTIG, LLC
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JMP Securities LLC
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Maxim Group LLC
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Academy Securities, Inc.
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Total
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20,000,000 |
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The underwriting agreement provides that the obligations of the underwriters to purchase the units included in this offering are subject to approval of legal matters by counsel and to other conditions. The underwriters are obligated to purchase all of the units (other than those covered by the underwriters’ over-allotment option described below) if they purchase any of the units.
The offering of the units by the underwriters is subject to receipt and acceptance and subject to the underwriters’ right to reject any order in whole or in part.
Units sold by the underwriters to the public will initially be offered at the initial public offering price set forth on the cover of this prospectus. Any units sold by the underwriters to securities dealers may be sold at a discount from the initial public offering price not to exceed $ per unit. If all of the units are not sold at the initial offering price, the underwriters may change the offering price and the other selling terms after completion of the initial public offering. The representatives have advised us that the underwriters do not intend to make sales to discretionary accounts.
If the underwriters sell more units than the total number set forth in the table above, we have granted to the underwriters an option, exercisable for 45 days from the date of this prospectus, to purchase up to 3,000,000 additional units at the public offering price less the underwriting discount. The underwriters may exercise this option solely for the purpose of covering over-allotments, if any, in connection with this offering. To the extent the option is exercised, each underwriter must purchase a number of additional units approximately proportionate to that underwriter’s initial purchase commitment. Any units issued or sold under the option will be issued and sold on the same terms and conditions as the other units that are the subject of this offering.
We, our sponsor and our officers and directors have agreed that, for a period of 180 days from the date of this prospectus, we and they will not, without the prior written consent of UBS Securities LLC, Stifel, Nicolaus & Company, Incorporated and BTIG, LLC, offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any units, warrants, shares of common stock or any other securities convertible into, or exercisable, or exchangeable for, shares of common stock, subject to certain exceptions. UBS Securities LLC, Stifel, Nicolaus & Company, Incorporated and BTIG, LLC in their sole discretion may release any of the securities subject to these lock-up agreements at any time without notice, other than in the case of the officers and directors, which shall be with notice. Our sponsor, officers and directors are also subject to separate transfer restrictions on their founder shares and private placement warrants pursuant to the letter agreement described herein.
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 and (B) subsequent
to our initial business combination, (x) if the last reported sale price of our Class A common stock equals or exceeds $12.00 per share 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 on which we complete a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property (except with respect to permitted transferees as described in the section of this prospectus entitled “Principal Stockholders—Restrictions on Transfers of Founder Shares and Private Placement Warrants”). The private placement warrants and the warrants that may be issued upon conversion of working capital loans (including the shares of Class A common stock issuable upon exercise of such warrants) will not be transferable, assignable or saleable by our sponsor, the direct anchor investors (as applicable) or their permitted transferees until 30 days after the completion of our initial business combination (except with respect to permitted transferees as described herein under the section of this prospectus entitled “Principal Stockholders—Restrictions on Transfers of Founder Shares and Placement Warrants”).
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. 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.
At our request, the underwriters have reserved up to 5% of the units being offered by this prospectus for sale at the initial public offering price to our directors, officers, employees and other individuals associated with us and members of their families. The sales will be made by UBS Financial Services Inc., a selected dealer affiliated with UBS Securities LLC, an underwriter of this offering, through a directed unit program. We do not know if these persons will choose to purchase all or any portion of these reserved units, but any purchases they do make will reduce the number of units available to the general public. Any reserved units not so purchased will be offered by the underwriters to the general public on the same terms as the other units. Participants in the directed unit program who purchase more than $1,000,000 of units will be subject to a 25-day lock-up with respect to any units sold to them pursuant to that program. This lock-up will have similar restrictions and an identical extension provision to the lock-up agreements described above. Any units sold in the directed unit program to our directors or executive officers shall be subject to the lock-up agreements described in this prospectus.
We have been approved to list our units on Nasdaq under the symbol “KINZ U.” We expect that our Class A common stock and warrants will be listed under the symbols “KINZ” and “KINZ WS,” respectively, once the Class A common stock and warrants begin separate trading.
The following table shows the underwriting discounts and commissions that we are to pay to the underwriters in connection with this offering. These amounts are shown assuming both no exercise and full exercise of the underwriters’ over-allotment option.
| |
|
|
|
Payable by KINS Technology Group Inc.
|
|
| |
|
|
|
No Exercise
|
|
|
Full Exercise
|
|
| |
Per Unit(1)
|
|
|
|
$ |
0.55 |
|
|
|
|
$ |
0.55 |
|
|
| |
Total(1)(2)
|
|
|
|
$ |
11,000,000 |
|
|
|
|
$ |
12,650,000 |
|
|
(1)
Includes $0.35 per unit, or up to $7,000,000 (or up to $8,050,000 if the underwriters’ over-allotment option is exercised in full) in the aggregate payable to the underwriters for deferred underwriting commissions to be placed in a trust account located in the United States as described herein. The deferred commissions will be released to the underwriters only on completion
of an initial business combination, in an amount equal to $0.35 multiplied by the number of shares of Class A common stock sold as part of the units in this offering, as described in this prospectus.
(2)
Certain investors identified by our sponsor may purchase units in this offering at the initial public offering price. The underwriters will not receive any underwriting discounts or commissions on the units purchased by such investors.
If we do not complete our initial business combination within 18 months from the closing of this offering or during any Extension Period and subsequently liquidate, the trustee and the underwriters have agreed that (i) they will forfeit any rights or claims to their deferred underwriting discounts and commissions, including any accrued interest thereon, then in the trust account upon liquidation, and (ii) that the deferred underwriting discounts and commissions will be distributed on a pro rata basis, including interest earned on the funds held in the trust account and not previously released to us to pay our taxes, to the public stockholders.
In connection with the offering, the underwriters may purchase and sell units in the open market. Purchases and sales in the open market may include short sales, purchases to cover short positions, which may include purchases pursuant to the over-allotment option and stabilizing purchases, in accordance with Regulation M under the Exchange Act.
➢
Short sales involve secondary market sales by the underwriters of a greater number of units than they are required to purchase in the offering.
➢
“Covered” short sales are sales of units in an amount up to the number of units represented by the underwriters’ over-allotment option.
➢
“Naked” short sales are sales of units in an amount in excess of the number of units represented by the underwriters’ over-allotment option.
➢
Covering transactions involve purchases of units either pursuant to the over-allotment option or in the open market after the distribution has been completed in order to cover short positions.
➢
To close a naked short position, the underwriters must purchase units in the open market after the distribution has been completed. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the units in the open market after pricing that could adversely affect investors who purchase in the offering.
➢
To close a covered short position, the underwriters must purchase units in the open market after the distribution has been completed or must exercise the over-allotment option. In determining the source of units to close the covered 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.
➢
Stabilizing transactions involve bids to purchase units so long as the stabilizing bids do not exceed a specified maximum.
Purchases to cover short positions and stabilizing purchases, as well as other purchases by the underwriters for their own accounts, may have the effect of preventing or retarding a decline in the market price of the units. They may also cause the price of the units to be higher than the price that would otherwise exist in the open market in the absence of these transactions. The underwriters may conduct these transactions in the over-the-counter market or otherwise. If the underwriters commence any of these transactions, they may discontinue them at any time.
The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representative has repurchased units sold by or for the account of such underwriter in stabilizing or short covering transactions.
We estimate that our portion of the total expenses of this offering payable by us will be $750,000, excluding underwriting discounts and commissions. We have agreed to reimburse the underwriters for all expenses and fees related to the review by FINRA, including counsel fees which will not exceed $25,000.
We have agreed to indemnify the several underwriters against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the underwriters may be required to make because of any of those liabilities.
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, we expect an affiliate of UBS Securities LLC will manage the funds placed in the trust account upon consummation of this offering and may therefore have an ongoing relationship with us. Additionally, 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 underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include sales and trading, commercial and investment banking, advisory, investment management, investment research, principal investment, hedging, market making, brokerage and other financial and non-financial activities and services. 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, including in connection with acting in an advisory capacity or as a potential financing source in conjunction with our potential acquisition of a company. They have received, or may in the future receive, customary fees and commissions for these transactions.
In the ordinary course of their various business activities, the underwriters and their respective affiliates, officers, directors and employees may purchase, sell or hold a broad array of investments and actively trade securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments for their own account and for the accounts of their customers, and such investment and trading activities may involve or relate to assets, securities and/or instruments of the issuer (directly, as collateral securing other obligations or otherwise) and/or persons and entities with relationships with the issuer. The underwriters and their respective affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire, long and/or short positions in such assets, securities and instruments.
Notice to prospective investors in the European Economic Area
In relation to each member state of the European Economic Area that has implemented the Prospectus Directive (each, a “relevant member state”), with effect from and including the date on which the Prospectus Directive is implemented in that relevant member state (the “relevant implementation date”), an offer of units described in this prospectus may not be made to the public in that relevant member state prior to the publication of a prospectus in relation to the units that 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, with effect from and including the relevant implementation date, an offer of our units may be made to the public in that relevant member state at any time:
➢
to any legal entity which is a qualified investor as defined in the Prospectus Directive;
➢
to fewer than 100, or, if the relevant member state has implemented the relevant provisions of the 2010 PD Amending Directive, 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the relevant Dealer or Dealers nominated by the issuer for any such offer; or natural or legal persons (other than qualified investors as defined below) subject to obtaining the prior consent of the underwriter for any such offer; or
➢
in any other circumstances that do not require the publication by us of a prospectus pursuant to Article 3 of the Prospectus Directive.
provided that no such offer of units referred to in the bullet points above shall require us or any underwriter to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive.
Each purchaser of units described in this prospectus located within a relevant member state will be deemed to have represented, acknowledged and agreed that it is a “qualified investor” within the meaning of Article 2(1)(e) of the Prospectus Directive.
For the purpose of this provision, the expression an “offer of units to the public” 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 for the units, as the expression 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 amendments thereto, including the 2010 PD Amending Directive to the extent implemented by the relevant member state) and includes any relevant implementing measure in each relevant member state. The expression 2010 PD Amending Directive means Directive 2010/73/EU.
We have not authorized and do not authorize the making of any offer of units through any financial intermediary on their behalf, other than offers made by the underwriters with a view to the final placement of the units as contemplated in this prospectus. Accordingly, no purchaser of the units, other than the underwriters, is authorized to make any further offer of the units on behalf of us or the underwriters.
Furthermore, the units are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available by any person to any retail investor in the European Economic Area (the “EEA”). For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU (as amended, “MiFID II”); (ii) a customer within the meaning of Directive 2002/92/EC, as amended, where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II or (iii) not a qualified investor as defined in Directive 2003/71/EC (as amended, including by Directive 2010/73/EU, the “Prospectus Directive”). Consequently, no key information document required by Regulation (EU) No 1286/2014 (as amended, the “PRIIPs Regulation”) for offering or selling the units or otherwise making them available to retail investors in the EEA has been prepared and therefore offering or selling the units or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation. This prospectus has been prepared on the basis that any offer of units in any member state of the EEA will be made pursuant to an exemption under the Prospectus Directive from the requirement to publish a prospectus for offers of units. This prospectus is not a prospectus for the purposes of the Prospectus Directive.
Notice to prospective investors in the United Kingdom
This prospectus is only being distributed to, and is only directed at, persons in the United Kingdom that are qualified investors within the meaning of Article 2(1)(e) of the Prospectus Directive that are also (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or (ii) high net worth entities, and other persons to whom
it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (each such person being referred to as a “relevant person”). The units are only available to, and any invitation, offer or agreement to purchase or otherwise acquire such units will be engaged in only with, relevant persons. This prospectus and its contents are confidential and should not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any other persons in the United Kingdom. Any person in the United Kingdom that is not a relevant person should not act or rely on this document or any of its contents.
Notice to prospective investors in France
Neither this prospectus nor any other offering material relating to the units described in this prospectus has been submitted to the clearance procedures of the Autorité des Marchés Financiers or by the competent authority of another member state of the European Economic Area and notified to the Autorité des Marchés Financiers. The units have not been offered or sold and will not be offered or sold, directly or indirectly, to the public in France. Neither this prospectus nor any other offering material relating to the units has been or will be:
➢
released, issued, distributed or caused to be released, issued or distributed to the public in France; or
➢
used in connection with any offer for subscription or sale of the units to the public in France.
Such offers, sales and distributions will be made in France only:
➢
to qualified investors (investisseurs qualifiés) and/or to a restricted circle of investors (cercle restreint d’investisseurs), in each case investing for their own account, all as defined in, and in accordance with, articles L.411-2, D.411-1, D.411-2, D.734-1, D.744-1, D.754-1 and D.764-1 of the French Code monétaire et financier;
➢
to investment services providers authorized to engage in portfolio management on behalf of third parties; or
➢
in a transaction that, in accordance with article L.411-2-II-1° -or-2° -or 3° of the French Code monétaire et financier and article 211-2 of the General Regulations (Règlement Général) of the Autorité des Marchés Financiers, does not constitute a public offer (appel public à l’épargne).
The units may be resold directly or indirectly, only in compliance with articles L.411-1, L.411-2, L.412-1 and L.621-8 through L.621-8-3 of the French Code monétaire et financier.
Notice to prospective investors in Hong Kong
The units may not be offered or sold in Hong Kong by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong), or (ii) to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a “prospectus” within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong) and no advertisement, invitation or document relating to the units may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), 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 laws of Hong Kong) other than with respect to units which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.
Notice to prospective investors in Singapore
This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or
invitation for subscription or purchase, of the units may not be circulated or distributed, nor may the units be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”), (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA, in each case subject to compliance with conditions set forth in the SFA.
Where the units are subscribed or purchased under Section 275 of the SFA by a relevant person which is
➢
a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or
➢
a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, shares, debentures and units of shares and debentures of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the shares pursuant to an offer made under Section 275 of the SFA except:
➢
to an institutional investor (for corporations, under Section 274 of the SFA) or to a relevant person defined in Section 275(2) of the SFA, or to any person pursuant to an offer that is made on terms that such shares, debentures and units of shares and debentures of that corporation or such rights and interest in that trust are acquired at a consideration of not less than $200,000 (or its equivalent in a foreign currency) for each transaction, whether such amount is to be paid for in cash or by exchange of securities or other assets, and further for corporations, in accordance with the conditions specified in Section 275 of the SFA;
➢
where no consideration is or will be given for the transfer; or
➢
where the transfer is by operation of law.
Notification under Section 309B of the Securities and Futures Act, Chapter 289 of Singapore: The units are prescribed capital markets products (as defined in the Securities and Futures (Capital Markets Products) Regulations 2018 and Excluded Investment Products (as defined in MAS Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16: Notice on Recommendations on Investment Products).
Notice to prospective investors in Japan
The securities have not been and will not be registered under the Financial Instruments and Exchange Law of Japan (the Financial Instruments and Exchange Law) and each underwriter has agreed that it will not offer or sell any securities, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Law and any other applicable laws, regulations and ministerial guidelines of Japan.
Notice to prospective investors in Canada
The units may be sold in Canada only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National
Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the units must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws.
Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus (including any amendment thereto) 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 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.
Pursuant to section 3A.3 of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.
Legal Matters
Skadden, Arps, Slate, Meagher & Flom LLP, Palo Alto, 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. In connection with this offering, Ropes & Gray LLP is acting as counsel to the underwriters.
Experts
The financial statements of KINS Technology Group Inc. as of July 27, 2020, and for the period from July 20, 2020 (inception) through July 27, 2020, have been audited by WithumSmith+Brown, PC, independent registered public accounting firm, as stated in their report which is incorporated herein. Such financial statements have been incorporated herein in reliance on the report of such firm given upon their authority as experts in accounting and auditing.
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.
Index to Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
To the Stockholder and the Board of Directors of
KINS Technology Group Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheet of KINS Technology Group Inc. (the “Company”) as of July 27, 2020, the related statements of operations, changes in stockholder’s equity and cash flows for the period from July 20, 2020 (inception) through July 27, 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 July 27, 2020, and the results of its operations and its cash flows for the period from July 20, 2020 (inception) through July 27, 2020, in conformity with accounting principles generally accepted in the United States of America.
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/ WithumSmith+Brown, PC
We have served as the Company’s auditor since 2020.
New York, New York
October 14, 2020
KINS TECHNOLOGY GROUP INC.
BALANCE SHEETS
SEPTEMBER 30, 2020
| |
|
|
September 30,
2020
|
|
|
July 27,
2020
|
|
| |
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Deferred offering costs
|
|
|
|
$ |
374,959 |
|
|
|
|
$ |
51,000 |
|
|
|
Total Assets
|
|
|
|
$ |
374,959 |
|
|
|
|
$ |
51,000 |
|
|
|
LIABILITIES AND STOCKHOLDER’S EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued expenses
|
|
|
|
$ |
1,000 |
|
|
|
|
$ |
1,000 |
|
|
|
Accrued offering costs
|
|
|
|
|
280,105 |
|
|
|
|
|
26,000 |
|
|
|
Promissory note – related party
|
|
|
|
|
69,854 |
|
|
|
|
|
— |
|
|
|
Total Current Liabilities
|
|
|
|
|
350,959 |
|
|
|
|
|
27,000 |
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholder’s Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
Class A common stock, $0.0001 par value; 75,000,000 shares authorized; none issued and outstanding
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
Class B common stock, $0.0001 par value; 10,000,000 shares authorized; 5,750,000 shares issued and outstanding(1)
|
|
|
|
|
575 |
|
|
|
|
|
575 |
|
|
|
Additional paid-in capital
|
|
|
|
|
24,425 |
|
|
|
|
|
24,425 |
|
|
|
Accumulated deficit
|
|
|
|
|
(1,000) |
|
|
|
|
|
(1,000) |
|
|
|
Total Stockholder’s Equity
|
|
|
|
|
24,000 |
|
|
|
|
|
24,000 |
|
|
|
Total Liabilities and Stockholder’s Equity
|
|
|
|
$ |
374,959 |
|
|
|
|
$ |
51,000 |
|
|
(1)
Includes an aggregate of up to 750,000 shares of Class B 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.
KINS TECHNOLOGY GROUP INC.
STATEMENTS OF OPERATIONS
FOR THE PERIOD FROM JULY 20, 2020 (INCEPTION)
THROUGH SEPTEMBER 30, 2020
| |
|
|
For the Period from July 20, 2020
(inception) through
|
|
| |
|
|
September 30, 2020
|
|
|
July 27, 2020
|
|
| |
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
Formation costs
|
|
|
|
$ |
1,000 |
|
|
|
|
$ |
1,000 |
|
|
|
Net loss
|
|
|
|
$ |
(1,000) |
|
|
|
|
$ |
(1,000) |
|
|
|
Weighted average shares outstanding, basic and diluted(1)
|
|
|
|
|
5,000,000 |
|
|
|
|
|
5,000,000 |
|
|
|
Basic and diluted net loss per common share
|
|
|
|
$ |
(0.00) |
|
|
|
|
$ |
(0.00) |
|
|
(1)
Excludes an aggregate of up to 750,000 shares of Class B 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.
KINS TECHNOLOGY GROUP INC.
STATEMENTS OF CHANGES IN STOCKHOLDER’S EQUITY
FOR THE PERIOD FROM JULY 20, 2020 (INCEPTION)
THROUGH SEPTEMBER 30, 2020
| |
|
|
Class B
Common Stock
|
|
|
Additional
Paid-in
Capital
|
|
|
Accumulated
Deficit
|
|
|
Total
Stockholder’s
Equity
|
|
| |
|
|
Shares
|
|
|
Amount
|
|
|
Balance, July 20, 2020 (inception)
|
|
|
|
|
— |
|
|
|
|
$ |
— |
|
|
|
|
$ |
— |
|
|
|
|
$ |
— |
|
|
|
|
$ |
— |
|
|
|
Issuance of Class B common stock to
Sponsor(1)
|
|
|
|
|
5,750,000 |
|
|
|
|
|
575 |
|
|
|
|
|
24,425 |
|
|
|
|
|
— |
|
|
|
|
|
25,000 |
|
|
|
Net loss
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
(1,000) |
|
|
|
|
|
(1,000) |
|
|
|
Balance, July 27, 2020
|
|
|
|
|
5,750,000 |
|
|
|
|
$ |
575 |
|
|
|
|
$ |
24,425 |
|
|
|
|
$ |
(1,000) |
|
|
|
|
$ |
24,000 |
|
|
|
Net loss
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
Balance, September 30, 2020 (unaudited)
|
|
|
|
|
5,750,000 |
|
|
|
|
$ |
575 |
|
|
|
|
$ |
24,425 |
|
|
|
|
$ |
(1,000) |
|
|
|
|
$ |
24,000 |
|
|
(1)
Includes an aggregate of up to 750,000 shares of Class B 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.
KINS TECHNOLOGY GROUP INC.
STATEMENTS OF CASH FLOWS
FOR THE PERIOD FROM JULY 20, 2020 (INCEPTION)
THROUGH SEPTEMBER 30, 2020
| |
|
|
For the Period from July 20, 2020
(inception) through
|
|
| |
|
|
September 30, 2020
|
|
|
July 27, 2020
|
|
| |
|
|
(unaudited)
|
|
|
(audited)
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
$ |
(1,000) |
|
|
|
|
$ |
(1,000) |
|
|
|
Adjustment to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued expenses
|
|
|
|
|
1,000 |
|
|
|
|
|
1,000 |
|
|
|
Net cash used in operating activities
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
Net change in cash
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
Cash at beginning of period
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
Cash at end of period
|
|
|
|
$ |
— |
|
|
|
|
$ |
— |
|
|
|
Non-cash financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred offering costs paid directly by Sponsor in exchange for the issuance of Class B common stock
|
|
|
|
$ |
25,000 |
|
|
|
|
$ |
25,000 |
|
|
|
Deferred offering costs included in accrued offering costs
|
|
|
|
$ |
280,105 |
|
|
|
|
$ |
26,000 |
|
|
|
Payment of offering costs through promissory note
|
|
|
|
$ |
69,854 |
|
|
|
|
$ |
— |
|
|
The accompanying notes are an integral part of these financial statements.
KINS TECHNOLOGY GROUP INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 — DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
KINS Technology Group Inc. (the “Company”) was incorporated in Delaware on July 20, 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 not limited to a particular industry or sector for purposes of consummating a Business Combination. The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.
As of September 30, 2020, the Company had not commenced any operations. All activity for the period from July 20, 2020 (inception) through September 30, 2020 relates to the Company’s formation and the proposed initial public offering (“Proposed Public Offering”), which is described below. 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 from the proceeds derived from the Proposed Public Offering. The Company has selected December 31 as its fiscal year end.
The Company’s ability to commence operations is contingent upon obtaining adequate financial resources through a Proposed Public Offering of 20,000,000 units (the “Units” and, with respect to the Class A common stock included in the Units being offered, the “Public Shares”) at $10.00 per Unit (or 23,000,000 Units if the underwriters’ over-allotment option is exercised in full), which is discussed in Note 3, and the sale of 8,000,000 warrants (or 8,900,000 warrants if the underwriters’ over-allotment option is exercised on full) (the “Private Placement Warrants”) at a price of $1.00 per Private Placement Warrant in a private placement to KINS Capital LLC (the “Sponsor”) and certain funds and accounts managed by BlackRock, Inc. (the “Direct Anchor Investors” and which the Direct Anchor Investors, together with the Sponsor, are the “initial stockholders”), 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 Warrants, 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 with one or more operating businesses or assets with a fair market value equal to at least 80% of the net assets held in the Trust Account (as defined below) (excluding the deferred underwriting commissions and taxes payable on the interest earned on the Trust Account). The Company will only complete a 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 business sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”). Upon the closing of the Proposed Public Offering, management has agreed that an amount equal to at least $10.10 per Unit sold in the Proposed Public Offering, including proceeds of the Private Placement Warrants, will be held in a trust account (“Trust Account”), located in the United States and invested only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting certain conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the funds held in the Trust Account, as described below.
The Company will provide the holders of the outstanding Public Shares (the “Public Stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business
KINS TECHNOLOGY GROUP INC.
NOTES TO FINANCIAL STATEMENTS
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 stockholder approval of a Business Combination or conduct a tender offer will be made by the Company. The Public Stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially anticipated to be $10.10 per Public Share, plus any pro rata interest then in the Trust Account, net of taxes payable). There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants. The Public Shares subject to redemption will be recorded at a redemption value and classified as temporary equity upon the completion of the Proposed Public Offering in accordance with the Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.”
The Company will only proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 following any related redemptions and, if the Company seeks stockholder approval, a majority of the shares voted are voted in favor of the Business Combination. If a stockholder vote is not required by applicable law or stock exchange listing requirements and the Company does not decide to hold a stockholder vote for business or other reasons, the Company will, pursuant to its Amended and Restated 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 applicable law or stock exchange listing requirements, or the Company decides to obtain stockholder approval for business or other 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. If the Company seeks stockholder approval in connection with a Business Combination, the Sponsor has agreed to vote its Founder Shares (as defined in Note 5) and any Public Shares purchased during or after the Proposed Public Offering in favor of approving a Business Combination. Additionally, 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.
Notwithstanding the foregoing, if the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, 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 20% of the Public Shares, without the prior consent of the Company.
The Sponsor has agreed (a) to waive its redemption rights with respect to the Founder Shares and Public Shares held by it in connection with the completion of a Business Combination and (b) not to propose an amendment to the Certificate of Incorporation (i) to modify the substance or timing of the Company’s obligation to allow redemptions in connection with a Business Combination or to redeem 100% of its Public Shares if the Company does not complete a Business Combination within the Combination Period (as defined below) or (ii) with respect to any other provision relating to stockholders’ rights or pre-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 has not completed a Business Combination within 18 months from the closing of the Proposed Public Offering or during any extended time that the Company has to consummate a business combination beyond 18 months as a result of a stockholder vote to amend its certificate of incorporation (the “Combination Period”), 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 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
KINS TECHNOLOGY GROUP INC.
NOTES TO FINANCIAL STATEMENTS
released to pay 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), 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. There will be no redemption rights or liquidating distributions with respect to the Company’s warrants, which will expire worthless if the Company fails to complete a Business Combination within the Combination Period.
The Sponsor has agreed to waive its liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the Sponsor acquires Public Shares in or after the Proposed Public Offering, such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within the Combination Period. The underwriters have agreed to waive their rights to their deferred underwriting commission (see Note 6) held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than $10.10 per Unit.
In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $10.10 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 $10.10 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 prospective target business who executed a waiver of any and all rights to monies held in the Trust Account 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”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. 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 (except for the Company’s independent registered accounting firm), prospective target businesses and 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.
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying audited financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC. The accompanying unaudited financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the period presented. The interim results for the period from July 20, 2020 (inception) through September 30, 2020 are not necessarily indicative of the results to be expected for the period ending December 31, 2020 or for any future interim periods.
KINS TECHNOLOGY GROUP INC.
NOTES TO FINANCIAL STATEMENTS
The Company does not have sufficient liquidity to meet its anticipated obligations over the next year from the date of issuance of these financial statements. In connection with the Company’s assessment of going concern considerations in accordance with Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that the Company has access to funds from the Sponsor that are sufficient to fund the working capital needs of the Company until the earlier of the consummation of the Proposed Public Offering or one year from the date of issuance of these financial statements.
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (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 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. 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 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.
Use of Estimates
The preparation of financial statements in conformity with 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 at the date of the financial statements and the reported amounts of expenses during the reporting periods.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
Deferred Offering Costs
Deferred offering costs consist of legal, accounting and other costs incurred through the balance sheet date that are directly related to the Proposed Public Offering and that will be charged to stockholder’s
KINS TECHNOLOGY GROUP INC.
NOTES TO FINANCIAL STATEMENTS
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.
Income Taxes
The Company follows the asset and liability method of accounting for income taxes under 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.
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. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of July 27, 2020 and September 30, 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 July 20, 2020 (inception) through September 30, 2020. The Company’s deferred tax assets were deemed to be de minimis as of July 27, 2020 and September 30, 2020.
Net Loss per Common Share
Net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period, excluding shares of common stock subject to forfeiture by the Sponsor. Weighted average shares were reduced for the effect of an aggregate of 750,000 shares of Class B common stock that are subject to forfeiture if the over-allotment option is not exercised by the underwriters (see Note 5). At July 27, 2020 and September 30, 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 periods presented.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage of $250,000. The Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurement,” approximates the carrying amounts represented in the balance sheet, primarily due to their short-term nature.
KINS TECHNOLOGY GROUP INC.
NOTES TO FINANCIAL STATEMENTS
Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements.
NOTE 3 — PROPOSED PUBLIC OFFERING
Pursuant to the Proposed Public Offering, the Company intends to offer for sale 20,000,000 Units (or 23,000,000 Units if the underwriters’ over-allotment option is exercised in full) at a price of $10.00 per Unit. Each Unit will consist of one share of Class A common stock and one-half of one redeemable warrant (“Public Warrant”). Each whole Public Warrant will entitle 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).
NOTE 4 — PRIVATE PLACEMENT
The Sponsor and the Direct Anchor Investors have agreed to purchase an aggregate of 8,000,000 Private Placement Warrants (or 8,900,000 Private Placement Warrants if the underwriters’ over-allotment is exercised in full) at a price of $1.00 per Private Placement Warrant ($8,000,000, or an aggregate of $8,900,000 if the underwriters’ over-allotment is exercised in full) from the Company in a private placement that will occur simultaneously with the closing of the Proposed Public 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 (see Note 7). The proceeds from the sale of the Private Placement Warrants will be added to the net proceeds from the Proposed Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private Placement Warrants held in the Trust Account will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private Placement Warrants will expire worthless.
NOTE 5 — RELATED PARTIES
Founder Shares
On July 27, 2020, the Sponsor paid $25,000 to cover certain offering costs of the Company in consideration for 5,750,000 shares of Class B common stock (the “Founder Shares”). In October 2020, the Sponsor forfeited 625,000 Founder Shares and the Direct Anchor Investors purchased 625,000 Founder Shares for an aggregate purchase price of approximately $2,717, or approximately $0.004 per share. The Founder Shares include an aggregate of up to 750,000 shares subject to forfeiture by the Sponsor to the extent that the underwriters’ over-allotment is not exercised in full or in part, so that the number of Founder Shares will equal, on an as-converted basis, approximately 20% of the Company’s issued and outstanding common stock after the Proposed Public Offering.
The initial stockholders have agreed, 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 a Business Combination and (B) subsequent to a 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 capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after a Business Combination, or (y) the date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction that results in all of the Public Stockholders having the right to exchange their shares of common stock for cash, securities or other property.
Promissory Note — Related Party
On July 27, 2020, the Sponsor issued an unsecured promissory note to the Company (the “Promissory Note”), pursuant to which the Company may borrow up to an aggregate principal amount of $300,000.
KINS TECHNOLOGY GROUP INC.
NOTES TO FINANCIAL STATEMENTS
The Promissory Note is non-interest bearing and payable on the earlier of (i) December 31, 2020 or (ii) the consummation of the Proposed Public Offering. As of July 27, 2020 and September 30, 2020, there was $0 and $69,854, respectively, outstanding under the Promissory Note.
Related Party Loans
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”). Such Working Capital Loans would be evidenced by promissory notes. The notes may be repaid upon completion of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of the notes may be converted upon completion of a Business Combination into warrants at a price of $1.00 per warrant. Such warrants would be identical to the Private Placement Warrants. 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. As of July 27, 2020 and September 30, 2020, there were no amounts outstanding under the Working Capital Loans.
NOTE 6 — COMMITMENTS AND CONTINGENCIES
Risks and Uncertainties
Management continues to evaluate the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations, close of the Proposed Public Offering and/or search for a target company, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Registration Rights
The holders of the Founder Shares, Private Placement Warrants and securities that may be issued upon conversion of Working Capital Loans will be entitled to registration rights pursuant to a registration rights agreement to be signed prior to or on the effective date of Proposed Public Offering. The holders of the majority of these securities will be entitled to make up to three demands, excluding short form registration demands, that the Company register such securities for sale under the Securities Act. In addition, these holders will have certain “piggy-back” registration rights to include their securities in other registration statements filed subsequent to the completion of a Business Combination and rights to require us to register for resale such securities pursuant to Rule 415 under the Securities Act. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The Company will grant the underwriters a 45-day option from the date of Proposed Public Offering to purchase up to 3,000,000 additional Units to cover over-allotments, if any, at the Proposed Public Offering price less the underwriting discounts and commissions.
The underwriters will be entitled to a cash underwriting discount of $0.20 per Unit, or $4,000,000 in the aggregate (or $4,600,000 in the aggregate if the underwriters’ over-allotment option is exercised in full), payable upon the closing of the Proposed Public Offering. In addition, the underwriters will be entitled to a deferred fee of $0.35 per Unit, or up to $7,000,000 in the aggregate (or up to $8,050,000 in the aggregate if the underwriters’ over-allotment option is exercised in full). The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the
KINS TECHNOLOGY GROUP INC.
NOTES TO FINANCIAL STATEMENTS
Company completes a Business Combination, subject to the terms of the underwriting agreement. Certain investors identified by our sponsor may purchase units in this offering at the initial public offering price. The underwriters will not receive any underwriting discounts or commissions on the units purchased by such investors.
NOTE 7 — STOCKHOLDERS’ EQUITY
Preferred Stock — The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. At July 27, 2020 and September 30, 2020, there were no shares of preferred stock issued or outstanding.
Class A Common Stock — The Company is authorized to issue 75,000,000 shares of Class A common stock with a par value of $0.0001 per share. Holders of Class A common stock are entitled to one vote for each share. At July 27, 2020 and September 30, 2020, there were no shares of Class A common stock issued or outstanding.
Class B Common Stock — The Company is authorized to issue 10,000,000 shares of Class B common stock with a par value of $0.0001 per share. Holders of Class B common stock are entitled to one vote for each share. At July 27, 2020 and September 30, 2020, there were 5,750,000 shares of Class B common stock issued and outstanding, of which an aggregate of up to 750,000 shares of Class B common stock are subject to forfeiture to the extent that the underwriters’ over-allotment option is not exercised in full or in part so that the number of Founder Shares will equal 20% of the Company’s issued and outstanding common stock after the Proposed Public Offering.
Only holders of the Class B common stock will have the right to vote on the election of directors prior to the Business Combination. Holders of Class A common stock and holders of Class B common stock will vote together as a single class on all matters submitted to a vote of our stockholders except as otherwise required by law.
The shares of Class B common stock will automatically convert into Class A common stock at the time of a Business Combination, or earlier at the option of the holder (except for any Founder Shares held by the Direct Anchor Investors who have agreed not to effect a conversion with respect to such Founder Shares until the consummation of the initial Business Combination), on a one-for-one basis, subject to adjustment. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in excess of the amounts issued in the Proposed Public Offering and related to the closing of a Business Combination (including pursuant to a specified future issuance), the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the then-outstanding shares of Class B common stock agree to waive such adjustment with respect to any such issuance or deemed issuance, including pursuant to a specified future issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, on an as-converted basis, 20% of the sum of the total number of all shares of common stock outstanding upon the completion of Proposed Public Offering plus all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with a Business Combination (excluding any shares or equity-linked securities issued or issuable to any seller in a Business Combination).
Warrants — Public Warrants may only be exercised for a whole number of shares. No fractional warrants will be issued upon separation of the Units and only whole warrants will trade. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business
KINS TECHNOLOGY GROUP INC.
NOTES TO FINANCIAL STATEMENTS
Combination and (b) 12 months from the closing of the Proposed Public Offering. The Public Warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.
The Company 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 stock underlying the warrants is then effective and a prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration. No warrant will be exercisable and the Company will not be obligated to issue shares of Class A common stock upon exercise of a warrant unless Class A common stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants.
The Company has agreed that as soon as practicable, but in no event later than 20 business days after the closing of a Business Combination, the Company will use its commercially reasonable efforts to file, and within 60 business days following a Business Combination to have declared effective, a registration statement under the Securities Act covering the issuance of the shares of Class A common stock issuable upon exercise of the warrants. The Company will use its commercially reasonable efforts to maintain the effectiveness of such registration statement and a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed. Notwithstanding the above, if the 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, the Company may, at its 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 the Company so elects, the Company will not be required to file or maintain in effect a registration statement, but we will be required to use our commercially reasonable efforts to register or 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, the Company may redeem the outstanding Public Warrants:
•
in whole and not in part;
•
at a price of $0.01 per Public Warrant;
•
upon not less than 30 days’ prior written notice of redemption 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 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 warrant holders
If and when the warrants become redeemable by the Company, the Company 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.
Redemption of Warrants When the Price per Share of Class A Common Stock Equals or Exceeds $10.00 — Once the warrants become exercisable, the Company may redeem the outstanding warrants:
•
in whole and not in part;
•
at $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their warrants prior to redemption and receive that number of shares based on the redemption date and the fair market value of the Class A common stock;
KINS TECHNOLOGY GROUP INC.
NOTES TO FINANCIAL STATEMENTS
•
if, and only if, the last reported sale price of the Class A common stock equals or exceeds $10.00 per share 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, the Private Placement Warrants are also concurrently called for redemption on the same terms as the outstanding Public Warrants, as described above; and
•
if, and only if, there is an effective registration statement covering the issuance of the shares of Class A common stock (or a security other than the 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) issuable upon exercise of the warrants and a current prospectus relating thereto available throughout the 30-day period after written notice of redemption is given.
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 a 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 Company’s board of directors, and, in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor or its 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 a Business Combination on the date of the completion of a Business Combination (net of redemptions), and (z) the volume weighted average trading price of the Company’s Class A common stock during the 20 trading day period starting on the trading day after the day on which the Company completes a 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 higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger price will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price, and the $10.00 per share redemption trigger price will be adjusted will be adjusted (to the nearest cent) to be equal to the higher of the Market Value and the Newly Issued Price.
The Private Placement Warrants will be identical to the Public Warrants underlying the Units being sold in the Proposed Public Offering, except that the Private Placement Warrants and the shares of Class A common stock issuable upon the 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 exercisable on a cashless basis and be non-redeemable, except as described above, so long as they are held by the initial purchasers or their permitted transferees. If the Private Placement Warrants are held by someone other than the initial purchasers or their 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.
NOTE 8 — SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after July 27, 2020, the balance sheet date, up to October 14, 2020, the date that the audited financial statements were available to be issued. The Company also evaluated subsequent events and transactions that occurred after September 30, 2020, the balance sheet date, up to December 8, 2020, the date the unaudited interim financial statements were available to be issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.
In October 2020, the Sponsor forfeited and the Direct Anchor Investors purchased Founder Shares from the Company. Also in October 2020, the Direct Anchor Investors agreed to purchase Private Placement Warrants. See Notes 4 and 5 for further details.
KINS Technology Group Inc.
$200,000,000
20,000,000 Units
PRELIMINARY PROSPECTUS
, 2020
Joint Book-Running Managers
UBS Investment Bank
Stifel
BTIG
Co-Lead Manager
JMP Securities
Co-Managers
Maxim Group LLC
Academy Securities
Until , 2021 (25 days after the date of this prospectus), all dealers that buy, sell or trade shares of our securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses payable by us in connection with the offering described in this registration statement (other than the underwriting discount and commissions) will be as follows:
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SEC expenses
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$ |
29,854 |
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|
|
|
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| |
FlNRA expenses
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35,000 |
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Accounting fees and expenses
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40,000 |
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|
|
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Printing and engraving expenses
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30,000 |
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Travel and road show expenses
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|
20,000 |
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|
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Legal fees and expenses
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300,000 |
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Stock exchange listing and filing fees
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75,000 |
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Director & Officer liability insurance premiums(1)
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155,000 |
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Miscellaneous
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65,146 |
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Total
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$ |
750,000 |
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(1)
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.
“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 directors and officers 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 the certificate of incorporation or the bylaws 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 bylaw, 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 applicable 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 applicable 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 closing of this offering, 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 applicable 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 indemnification agreements with each of our officers and directors, a form of which is to be filed as an exhibit 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.
In July 2020, our sponsor purchased an aggregate of 5,750,000 founder shares in exchange for a capital contribution of $25,000. In October 2020, our sponsor forfeited 625,000 founder shares and the direct anchor investors purchased 625,000 founder shares for an aggregate purchase price of approximately $2,717, or approximately $0.004 per share. The number of founder shares issued was determined based on the expectation that the founder shares would represent 20% of the outstanding shares of common stock upon completion of this offering. 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. Each of our sponsor and independent directors is an accredited investor for purposes of Rule 501 of Regulation D.
Our sponsor and direct anchor investors have also committed to purchase an aggregate of 8,000,000 warrants at $1.00 per private warrant (for an aggregate purchase price of $8,000,000), or 8,900,000 warrants (for $8,900,000) if the underwriter’s option to purchase additional units is exercised in full. This purchase will take place on a private placement basis simultaneously with the consummation of the initial public offering. These issuances 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) The following exhibits are filed as part of this Registration Statement:
*
Filed herewith.
**
Previously filed.
(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 underwriter at the closing specified in the underwriting agreements, certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.
(b)
Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, or 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 Securities 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 Securities 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 of 1933, 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 of 1933, 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.
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 Palo Alto, State of California, on the 8th day of December, 2020.
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KINS TECHNOLOGY GROUP INC.
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BY:
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/s/ Khurram P. Sheikh
Name: Khurram P. Sheikh
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Title: Chief Executive Officer
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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.
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Name
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Position
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Date
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/s/ Khurram P. Sheikh
Khurram P. Sheikh
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Chairman, Chief Executive Officer and
Chief Financial Officer
(Principal Executive, Financial and
Accounting Officer)
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December 8, 2020
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*
Eric Zimits
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Chief Corporate Development Officer
and Secretary
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December 8, 2020
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*
Hassan Ahmed
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Director
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December 8, 2020
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*
Di-Ann Eisnor
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Director
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December 8, 2020
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*
Camillo Martino
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Director
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December 8, 2020
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Atif Rafiq
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Director
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December 8, 2020
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Allen Salmasi
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Director
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December 8, 2020
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*By:
/s/ Khurram P. Sheikh
Khurram P. Sheikh
Attorney-in-Fact
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Exhibit 1.1
20,000,000 Units
KINS Technology Group Inc.
UNDERWRITING AGREEMENT
[l], 2020
UBS Securities LLC
1285 Avenue of the Americas
New York, New York 10019
Stifel, Nicolaus & Company, Incorporated
1 South Street, 15th Floor
Baltimore, Maryland 21202
BTIG, LLC
65 E 55th Street
New York, New York 10022
As Representatives of the several Underwriters
Ladies and Gentlemen:
KINS Technology Group Inc., a Delaware
corporation (the “Company”), proposes to sell to you and, as applicable, to the several underwriters named in Schedule
I hereto (collectively, the “Underwriters”), for whom you (the “Representatives”) are acting as
representatives, up to 20,000,000 units of the Company (the “Underwritten Securities”). The Company also proposes
to grant to the Underwriters an option to purchase up to 3,000,000 additional units to cover over-allotments, if any (the
“Option Securities”; the Option Securities, together with the Underwritten Securities, being hereinafter called
the “Securities”). Certain capitalized terms used herein and not otherwise defined are defined in Section 22
hereof.
Each Security consists of one share of the
Company’s Class A common stock, par value $0.0001 per share (“Common Stock”), and one-half of one redeemable
warrant, where each whole warrant is exercisable to purchase one share of Common Stock (the “Warrant(s)”). The Common
Stock and Warrants included in the Securities will not trade separately until the 52nd day following the date of the Prospectus
(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 Commission on a 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 Warrants will be issued upon separation of the Securities, and only whole Warrants will trade. Each whole Warrant
entitles its holder, upon exercise, to purchase one share of Common Stock for $11.50 per share during the period commencing on
the later of thirty (30) days after the completion of an initial Business Combination (as defined below) or twelve (12) months
from the date of the consummation of the Offering and terminating on the five-year anniversary of the date of the completion of
such initial Business Combination or earlier upon redemption or liquidation; provided, however, that pursuant to
the Warrant Agreement (as defined below), a warrant may not be exercised for a fractional share. As used herein, the term “Business
Combination” (as described more fully in the Registration Statement) shall mean a merger, capital stock exchange, asset acquisition,
stock purchase, reorganization or similar business combination with one or more businesses.
The Company has entered into an Investment
Management Trust Agreement, effective as of the date hereof, with Continental Stock Transfer & Trust Company (“CST”),
as trustee, in substantially the form filed as Exhibit 10.2 to the Registration Statement (the “Trust Agreement”),
pursuant to which certain proceeds from the sale of the Private Placement Warrants (as defined below) and certain proceeds of the
Offering will be deposited and held in a trust account (the “Trust Account”) for the benefit of the Company, the Underwriters
and the holders of the Underwritten Securities and the Option Securities, if and when issued.
The Company has entered into a Warrant Agreement,
effective as of the date hereof, with respect to the Warrants and the Private Placement Warrants with CST, as warrant agent, in
substantially the form filed as Exhibit 4.4 to the Registration Statement (the “Warrant Agreement”), pursuant
to which CST will act as warrant agent in connection with the issuance, registration, transfer, exchange, redemption, and exercise
of the Warrants and Private Placement Warrants.
The Company has entered into a Securities
Subscription Agreement, dated as of July 27, 2020 (the “Founder’s Purchase Agreement”), with KINS Capital
LLC, a Delaware limited liability company (the “Sponsor”), pursuant to which the Sponsor purchased an aggregate of
5,750,000 shares of Class B common stock, par value $0.0001 per share, of the Company (including the shares of Common Stock
issuable upon conversion thereof, the “Founder Shares”), for an aggregate purchase price of $25,000. The Founder Shares
are substantially similar to the shares of Common Stock included in the Securities except as described in the Prospectus and constitute
all of the outstanding securities of the Company as of the date of this Agreement.
The Company has entered into Securities Subscription Agreements
with certain funds and accounts managed by BlackRock, Inc. (the "BlackRock Entities"), pursuant to which the BlackRock
Entities purchased an aggregate of 625,000 Founder Shares from the Company for an aggregate purchase price of approximately $2,717,
or approximately $0.004 per share, and agreed to purchase an aggregate of 980,393 warrants of the Company at a price of $1.00 per
warrant, each entitling the holder, upon exercise, to purchase one share of Common Stock for $11.50 per share (the "BlackRock
Warrants"). On October 14, 2020, the Sponsor forfeited 625,000 Founder Shares, resulting in the Sponsor holding 5,125,000
Founder Shares.
The Company has entered into a Sponsor
Warrants Purchase Agreement, effective as of the date hereof (the “Warrant Subscription Agreement”), with the
Sponsor, pursuant to which the Sponsor agreed to purchase an aggregate of 7,019,607 warrants (or up to 7,919,607 warrants if
the over-allotment option is exercised in full), at a price of $1.00 per warrant, each entitling the holder, upon exercise,
to purchase one share of Common Stock for $11.50 per share (together with the BlackRock Warrants, the “Private
Placement Warrants”). The Private Placement Warrants are substantially similar to the Warrants included in the
Securities, except as described in the Prospectus.
The Company has entered into a Registration
Rights Agreement, dated as of the date hereof, with the Sponsor and the other parties thereto, in substantially the form filed
as Exhibit 10.4 to the Registration Statement (the “Registration Rights Agreement”), pursuant to which the Company
has granted certain registration rights in respect of the Private Placement Warrants and the shares of Common Stock underlying
the Founder Shares, the Private Placement Warrants and the Warrants that may be issued upon conversion of working capital loans.
The Company has caused to be duly executed
and delivered a letter agreement, dated as of the date hereof, by and among the Sponsor and each of the Company’s officers
and directors, substantially in the form filed as Exhibit 10.1 to the Registration Statement (the “Insider Letter”).
The Company will enter into an Administrative
Services Agreement, dated as of the date hereof, with the Sponsor, in substantially the form filed as Exhibit 10.7 to the
Registration Statement (the “Administrative Services Agreement”), pursuant to which the Company will pay to the Sponsor
an aggregate monthly fee of $20,000 for certain office space, administrative and support services.
The Company hereby acknowledges that, in
connection with the proposed offering of the Units, it has requested UBS Financial Services Inc. (“UBS-FinSvc”) to
administer a directed unit program (the “Directed Unit Program”) under which up to 1,000,000 Units, or 5% of the Underwritten
Securities to be purchased by the Underwriters (“Reserved Units”), shall be reserved for sale by UBS-FinSvc at the
initial public offering price to the Company’s directors, officers, employees and other individuals associated with the Company
and members of their families as designated by the Company (the “Directed Unit Participants”) as part of the distribution
of the Underwritten Securities by the Underwriters, subject to the terms of this Agreement, the applicable rules, regulations and
interpretations of the Financial Industry Regulatory Authority, Inc. (“FINRA”) and all other applicable laws,
rules and regulations. The number of Underwritten Securities available for sale to the general public will be reduced to the
extent Directed Unit Participants purchase Reserved Units. The Underwriters may offer any Reserved Units not purchased by Directed
Unit Participants to the general public on the same basis as the other Underwritten Securities being issued and sold hereunder.
The Company has supplied UBS-FinSvc with the names, addresses and telephone numbers of the individuals or other entities which
the Company has designated to be participants in the Directed Unit Program. It is understood that any number of those so designated
to participate in the Directed Unit Program may decline to do so.
1. REPRESENTATIONS
AND WARRANTIES.
The Company represents and warrants to,
and agrees with, each Underwriter as set forth below in this Section 1.
(a) The
Company has prepared and filed with the Commission the Registration Statement on Form S-1 (File No. 333-249177), including
the related Preliminary Prospectus, for registration under the Act of the offering and sale of the Securities. Such Registration
Statement, including any amendments thereto filed prior to the Execution Time, has become effective. The Company has filed one
or more amendments thereto, including the related Preliminary Prospectus, each of which has previously been furnished to you.
The Company will file with the Commission the Prospectus in accordance with Rule 424(b). As filed, such Prospectus shall
contain all information required by the Act and, except to the extent the Representatives shall agree in writing to a modification,
shall be in all substantive respects in the form furnished to you prior to the Execution Time or, to the extent not completed
at the Execution Time, shall contain only such specific additional information and other changes (beyond that contained in the
latest Preliminary Prospectus) as the Company has advised you and that has been approved by you, prior to the Execution Time,
will be included or made therein. The Company has complied to the Commission’s satisfaction with all requests of the Commission
for additional or supplemental information.
(b) On
the Effective Date, the Registration Statement did, and when the Prospectus is first filed in accordance with Rule 424(b) and
on the Closing Date (as defined herein) and on any date on which Option Securities are purchased, if such date is not the Closing
Date (an “Additional Closing Date”), the Prospectus (and any supplement thereto) will, comply in all material respects
with the applicable requirements of the Act; on the Effective Date and at the Execution Time, the Registration Statement did not
and will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; and
on the date of any filing pursuant to Rule 424(b) and on the Closing Date and any Additional Closing Date, the Prospectus
(together with any supplement thereto) will not 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 under which they were made, not misleading;
provided, however, that the Company makes no representations or warranties as to the information contained in or
omitted from the Registration Statement or the Prospectus (or any supplement thereto) in reliance upon and in conformity with information
furnished in writing to the Company by or on behalf of any Underwriter through the Representatives specifically for inclusion in
the Registration Statement or the Prospectus (or any 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 8(b) hereof.
(c) The
Statutory Prospectus, as of the Applicable Time and on the Closing Date and any Additional Closing Date, did not and will not contain
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 under which they were made, not misleading; provided, however, that the Company makes
no representations or warranties as to the information contained in or omitted from the Statutory Prospectus in reliance upon and
in conformity with written information furnished to the Company by or on behalf of any Underwriter through the Representatives
specifically for use therein, it being understood and agreed that the only such information furnished by or on behalf of any Underwriter
consists of the information described as such in Section 8(b) hereof.
(d) The
Company has filed with the Commission a Form 8-A (file number 001-39642) providing for the registration under the Exchange Act
of the Securities, which registration is currently effective on the date hereof. The Securities have been authorized for listing,
subject to official notice of issuance and evidence of satisfactory distribution, on the Nasdaq Capital Market (“Nasdaq”),
and the Company knows of no reason or set of facts that is likely to adversely affect such authorization.
(e) The
Commission has not issued any order or, to the Company’s knowledge, threatened to issue any order preventing or suspending
the effectiveness of the Registration Statement or the use of any Preliminary Prospectus, the Prospectus or any part thereof, and
has not instituted or, to the Company’s knowledge, threatened to institute any proceedings with respect to such an order.
(f) (i) At
the time of filing the Registration Statement and (ii) as of the Execution Time (with such date being used as the determination
date for purposes of this clause (ii)), the Company was and is an Ineligible Issuer (as defined in Rule 405).
(g) The
Company has not prepared or used a Free Writing Prospectus.
(h) The
Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware
with full corporate power and authority to own or lease, as the case may be, and to operate its properties and conduct its business
as described in the Statutory Prospectus and the Prospectus and to enter into this Agreement, the Trust Agreement, the Warrant
Agreement, the Founder’s Purchase Agreement, the Warrant Subscription Agreement, the Registration Rights Agreement, the Insider
Letter and the Administrative Services Agreement, and to carry out the transactions contemplated hereby and thereby, and is duly
qualified to do business as a foreign corporation and is in good standing under the laws of each jurisdiction that requires such
qualification. The Company has no subsidiaries.
(i) 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 Statutory Prospectus contains in all
material respects the same description of the foregoing matters contained in the Prospectus); and the statements in the Statutory
Prospectus and the Prospectus under the headings “Principal Stockholders,” “Certain Relationships and Related
Party Transactions,” and “Description of Securities,” insofar as such statements summarize legal matters, agreements,
documents or proceedings discussed therein, are 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 Act
to be described in the Registration Statement or Prospectus that have not been described as required.
(j) The
Company’s authorized equity capitalization is as set forth in the Registration Statement, Statutory Prospectus and the Prospectus.
(k) The
Founder Shares have been duly and validly authorized and issued and are fully paid and, except with respect to the forfeiture of
certain Founder Shares as described in the Registration Statement upon the failure by the Underwriters to purchase any or all of
the Option Securities, nonassessable; and none of such shares were issued in violation of the preemptive rights of any holders
of any security of the Company or similar contractual rights granted by the Company. The offers and sales of the Founder Shares
were at all relevant times either registered under the Act, the applicable state securities and blue sky laws or, based in part
on the representations and warranties of the purchasers of such Founder Shares, exempt from such registration requirements. The
holders of outstanding shares of the Company are not entitled to preemptive or other rights to subscribe for the securities arising
by operation of law or under the Amended and Restated Certificate of Incorporation of the Company (the “Amended and Restated
Certificate of Incorporation”), bylaws of the Company (“Bylaws”) or otherwise; and, except as set forth in the
Statutory Prospectus and the Prospectus, no options, warrants or other rights to purchase, agreements or other obligations to issue,
or rights to convert any obligations into or exchange any securities for, shares or other ownership interests in the Company are
outstanding.
(l) The
Securities have been duly authorized and when issued and delivered by the Company against payment by the Underwriters pursuant
to this Agreement, will be validly issued.
(m) The
shares of Common Stock included in the Securities have been duly authorized and, when issued and delivered against payment for
the Securities by the Underwriters pursuant to this Agreement, will be validly issued, fully paid and nonassessable.
(n) The
Warrants included in the Securities, when executed, authenticated, issued and delivered in the manner set forth in the Warrant
Agreement against payment for the Securities by the Underwriters pursuant to this Agreement, 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.
(o) The
shares of Common Stock issuable upon exercise of the Warrants included in the Securities and the Private Placement Warrants have
been duly authorized and reserved for issuance upon exercise thereof and, when issued and delivered against payment therefor pursuant
to the Warrants and the Private Placement Warrants, as applicable, and the Warrant Agreement, will be validly issued, fully paid
and nonassessable. The holders of such shares of 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 preemptive or other similar contractual
rights granted by the Company; and all corporate action required to be taken for the authorization, issuance and sale of such shares
of Common Stock (other than such execution, countersignature and delivery at the time of issuance) has been duly and validly taken.
(p) Except
as set forth in the Statutory Prospectus and the Prospectus, no holders of any securities of the Company or any rights exercisable
for or convertible or exchangeable into securities of the Company have the right to require the Company to register any such securities
of the Company under the Act or to include any such securities in a registration statement to be filed by the Company.
(q) No
securities of the Company have been sold by the Company or by or on behalf of, or for the benefit of, any person or persons controlling,
controlled by, or under common control with the Company from its inception through and including the date hereof, except as disclosed
in the Registration Statement, the Statutory Prospectus and the Prospectus.
(r) Neither
the Company nor any of its affiliates has, prior to the date hereof, made any offer or sale of any securities that are required
to be “integrated” pursuant to the Act with the offer and sale of the Underwritten Securities pursuant to the Registration
Statement.
(s) The
Private Placement Warrants have been duly authorized and, when delivered upon the consummation of this Offering, 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.
(t) This
Agreement has been duly authorized, executed and delivered by the Company and is a valid and binding agreement of the Company,
enforceable against the Company in accordance with its 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.
(u) The
Trust Agreement has been duly authorized, executed and delivered by the Company, and is a valid and binding agreement of the Company,
enforceable against the Company, in accordance with its 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.
(v) The
Warrant Agreement has been duly authorized, executed and delivered by the Company and is a valid and binding agreement of the Company,
enforceable against the Company in accordance with its 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.
(w) The
Founder’s Purchase Agreement has been duly authorized, executed and delivered by the Company and the Sponsor, and is a valid
and binding agreement of the Company and the Sponsor, enforceable against the Company and the Sponsor in accordance with its 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.
(x) The
Warrant Subscription Agreement has been duly authorized, executed and delivered by the Company and the Sponsor, and is a valid
and binding agreement of the Company and the Sponsor, enforceable against the Company and the Sponsor in accordance with its 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.
(y) The
Registration Rights Agreement has been duly authorized, executed and delivered by the Company and is a valid and binding agreement
of the Company, enforceable against the Company in accordance with its 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.
(z) The
Insider Letter executed by the Company, the Sponsor and each executive officer and director of the Company, has been duly authorized,
executed and delivered by the Company, the Sponsor and, to the Company’s knowledge, each such executive officer and director,
respectively, and is a valid and binding agreement of the Company, the Sponsor and, to the Company’s knowledge, each such
executive officer and director, respectively, enforceable against the Company, the Sponsor and, to the Company’s knowledge,
each such executive officer and director, respectively, in accordance with its 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.
(aa) The
Administrative Services Agreement has been duly authorized, executed and delivered by the Company and, assuming the due authorization,
execution and delivery thereof by the Sponsor party thereto, is a valid and binding agreement of the Company, enforceable against
the Company in accordance with its 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.
(bb) The
Company is not and, after giving effect to the offering and sale of the Securities and the application of the proceeds thereof
as described in the Statutory Prospectus and the Prospectus, will not be an “investment company” as defined in the
Investment Company Act of 1940, as amended.
(cc) No
consent, approval, authorization, filing with or order of any court or governmental agency or body is required in connection with
the transactions contemplated herein or in the Trust Agreement, the Warrant Agreement, the Founder’s Purchase Agreement,
the Warrant Subscription Agreement, the Registration Rights Agreement, the Insider Letter or the Administrative Services Agreement,
except for the registration under the Act and the Exchange Act of the Securities and such as may be required under state securities
or blue sky laws of any jurisdiction in connection with the purchase and distribution of the Securities by the Underwriters in
the manner contemplated herein and in the Statutory Prospectus and the Prospectus.
(dd) The
Company is not in violation or default of (i) any provision of its Amended and Restated Certificate of Incorporation or Bylaws,
(ii) the terms of any indenture, contract, lease, mortgage, deed of trust, note agreement, loan agreement or other agreement,
obligation, condition, covenant or instrument to which it is a party or bound or to which its property is subject, or (iii) any
(x) statute, law, rule, regulation, or (y) judgment, order or decree of any court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having jurisdiction over the Company; except in the case of clauses (ii) and
(iii) above for any such conflict, breach or violation that would not, individually or in the aggregate, be reasonably expected
to have a material adverse effect on the financial condition, prospects, earnings, business or properties of the Company, taken
as a whole, whether or not arising from transactions in the ordinary course of business (a “Material Adverse Effect”).
(ee) Neither
the issue and sale of the Securities nor the consummation of any other of the transactions herein contemplated nor the fulfillment
of the terms hereof or of the Trust Agreement, the Warrant Agreement, the Founder’s Purchase Agreement, the Warrant Subscription
Agreement, the Registration Rights Agreement, the Insider Letter or the Administrative Services Agreement will conflict with, result
in a breach or violation of, or imposition of any lien, charge or encumbrance upon any property or assets of the Company pursuant
to, (i) the Amended and Restated Certificate of Incorporation or Bylaws, (ii) the terms of any indenture, contract, lease,
mortgage, deed of trust, note agreement, loan agreement or other agreement, obligation, condition, covenant or instrument to which
the Company is a party or bound or to which the Company’s property is subject, or (iii) any statute, law, rule, or regulation,
judgment, order or decree applicable to the Company of any court, regulatory body, administrative agency, governmental body, arbitrator
or other authority having jurisdiction over the Company or any of its respective properties.
(ff) No
holders of securities of the Company have rights to the registration of such securities under the Registration Statement.
(gg) The
historical financial statements, including the notes thereto and the supporting schedules, if any, of the Company included in the
Statutory Prospectus, the Prospectus and the Registration Statement present fairly in all material respects the financial condition,
results of operations and cash flows of the Company as of the dates and for the periods indicated, comply as to form with the applicable
accounting requirements of the Act and have been prepared in conformity with generally accepted accounting principles applied on
a consistent basis throughout the periods involved (except as otherwise noted therein). The summary financial data set forth under
the caption “Summary financial data” in the Statutory Prospectus, Prospectus and Registration Statement fairly present,
on the basis stated in the Statutory Prospectus, Prospectus and Registration Statement, the information included therein. The Company
is not party to any off-balance sheet transactions, arrangements, obligations (including contingent obligations), or other relationships
with unconsolidated entities or other persons that may have a material current or future effect on the Company’s financial
condition, changes in financial condition, results of operations, liquidity, capital expenditures, capital resources, or significant
components of revenues or expenses. The statistical, industry-related and market-related data included in the Registration Statement,
the Statutory Prospectus and the Prospectus are based on or derived from sources that the Company reasonably and in good faith
believes are reliable and accurate, and such data agree with the sources from which they are derived.
(hh) No
action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company
or the Sponsor, or the property of either of them is pending or, to the knowledge of the Company, threatened that (i) would
reasonably be expected to have a material adverse effect on the performance of this Agreement or the consummation of any of the
transactions contemplated hereby by the Company or (ii) would reasonably be expected to have a Material Adverse Effect, except
as set forth in or contemplated in the Statutory Prospectus and the Prospectus (exclusive of any supplement thereto).
(ii) The
Company owns or leases all such properties as are necessary to the conduct of its operations as presently conducted.
(jj) WithumSmith+Brown,
PC (“Withum”), who have certified certain financial statements of the Company and delivered their report with respect
to the audited financial statements and schedules included in the Registration Statement, Statutory Prospectus and the Prospectus,
is a registered public accounting firm that is independent with respect to the Company within the meaning of the Act and the Exchange
Act and the applicable published rules and regulations thereunder.
(kk) The
Company maintains effective “disclosure controls and procedures” (as defined under Rule 13a-15(e) under the
Exchange Act to the extent required by such rule).
(ll) 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 to comply in all material respects with the applicable provisions of the Sarbanes Oxley Act.
(mm) 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
or directors, in their capacities as such, to comply with (as and when applicable), and immediately following the Effective Date
the Company will be in compliance with, the listing rules of Nasdaq (subject to applicable phase-in 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
or directors, in their capacities as such, to comply with (as and when applicable), and immediately following the Effective Date
the Company will be in compliance with, the phase-in requirements and all other provisions of the Nasdaq corporate governance requirements
set forth in the Nasdaq Marketplace Rules.
(nn) 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 Securities.
(oo) The
Company has filed all tax returns (including U.S. federal, state and non-U.S.) that are required to be filed by it or has requested
extensions thereof (except in any case in which the failure so to file would not have a Material Adverse Effect) through the date
hereof and has paid all taxes required to be paid by it and any other assessment, fine or penalty levied against it, to the extent
that any of the foregoing is due and payable, except for any such assessment, fine or penalty that is currently being contested
in good faith and for which adequate reserves required by generally accepted accounting principles have been created with respect
thereto or as would not be reasonably expected to have a Material Adverse Effect, except as set forth in or contemplated in the
Registration Statement, Statutory Prospectus and the Prospectus (exclusive of any supplement thereto).
(pp) The
Company possesses all licenses, certificates, permits and other authorizations issued by the appropriate federal, state or foreign
regulatory authorities necessary to conduct its business, and the Company has not received any notice of proceedings relating to
the revocation or modification of any such license, certificate, authorization or permit that, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would have a Material Adverse Effect, except as set forth in or contemplated
in the Statutory Prospectus and the Prospectus (exclusive of any supplement thereto).
(qq) None
of the Company, the Sponsor or, to the knowledge of the Company, any director, officer, agent, employee, affiliate or other person
associated with or acting on behalf of the Company: (i) has used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expense relating to political activity: (ii) has made any direct or indirect unlawful contribution
or payment to any official of, or candidate for, or any employee of, any federal, state or foreign office from corporate funds;
(iii) has made any bribe, unlawful rebate, payoff, influence payment, kickback or other unlawful payment; or (iv) is
aware of or has taken any action, directly or indirectly, that would result in a violation by such persons of the OECD Convention
on Bribery of Foreign Public Officials in International Business Transactions (“OECD Convention”), the Foreign Corrupt
Practices Act of 1977, as amended, and the rules and regulations thereunder (collectively, the “FCPA”) or any
similar law or regulation to which the Company, any director, officer, agent, employee, affiliate or other person associated with
or acting on behalf of the Company is subject. The Company, the Sponsor and, to the knowledge of the Company, its directors, officers,
agents, employees and affiliates have each conducted the business of the Company and their own businesses on behalf of the Company
in compliance with the FCPA and any applicable similar law or regulation and have instituted and maintain policies and procedures
designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith.
(rr) The
operations of the Company are and have been conducted at all times in compliance with applicable financial record-keeping and reporting
requirements, including those of the 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”), the Currency and Foreign
Transactions Reporting Act of 1970, as amended, the applicable money laundering statutes of jurisdictions where the Company conducts
business, the applicable rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued,
administered or enforced by any governmental agency (collectively, the “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 Money Laundering Laws is pending or, to the knowledge of the Company, threatened.
(ss) None
of the Company, the Sponsor or, to the knowledge of the Company, any director, officer, agent or affiliate of the Company is currently
subject to any sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”)
or any similar sanctions imposed by any other body, governmental or other, to which any of such persons is subject (collectively,
“other economic sanctions”); and the Company will not directly or indirectly use the proceeds of the Offering, or lend,
contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, for the
purpose of financing the activities of any person currently subject to any sanctions administered by OFAC or other economic sanctions.
(tt) Except
as disclosed in the Registration Statement, the Statutory Prospectus and the Prospectus, the Company (i) does not have any
material lending or other relationship with any bank or lending affiliate of any of the Underwriters and (ii) does not intend
to use any of the proceeds from the sale of the Securities hereunder to repay any outstanding debt owed to any affiliate of any
of the Underwriters.
(uu) The
Company acknowledges that, in accordance with the requirements of the USA PATRIOT Act, 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.
(vv) All
information contained in the questionnaires (the “Questionnaires”) completed by the Sponsor and, to the knowledge of
the Company, the Company’s officers and directors and provided to the Underwriters, is true and correct in all material respects
and the Company has not become aware of any information that would cause the information disclosed in the Questionnaires completed
by the Sponsor or the Company’s officers and directors to become inaccurate and incorrect in any material respect.
(ww) Except
as described in the Statutory Prospectus and the Prospectus, to the Company’s knowledge, none of the Sponsor, officers or
directors of the Company is subject to a non-competition agreement or non-solicitation agreement with any employer or prior employer
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.
(xx) Except
as disclosed in the Registration Statement, the Statutory Prospectus and the Prospectus, prior to the date hereof, the Company
has not selected any specific acquisition target and has not, nor, to its knowledge, has anyone on its behalf, initiated contact
with any prospective acquisition target or had any substantive discussions, formal or otherwise, with respect to a possible initial
Business Combination, or undertaken, or engaged or retained any agent or other representative to contact any suitable acquisition
candidate.
(yy) Except
as described in the Registration Statement, the Statutory Prospectus 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 or the Sponsor with respect to the sale of the Securities hereunder or any other arrangements, agreements
or understandings of the Company, the Sponsor, any officer or director of the Company, or their respective affiliates, that may
affect the Underwriters’ compensation, as determined by FINRA.
(zz) Except
as described in the Registration Statement, the Statutory Prospectus and the Prospectus, the Company has not made any direct or
indirect payments (in cash, securities or any other “item of value” as defined in Rule 5110(c)(3) 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 Effective Date, other than payments to the Underwriters pursuant to this Agreement.
(aaa) Except
as described in the Registration Statement, the Statutory Prospectus and the Prospectus, during the period beginning 180 days prior
to the initial confidential submission of the Registration Statement and ending on the Effective Date, 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.
(bbb) Except
as disclosed in the FINRA Questionnaires provided to the Representatives, to the Company’s knowledge no officer, director,
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.
(ccc) Except
as disclosed in the FINRA Questionnaires provided to the Representatives, to the Company’s knowledge, no Company Affiliate
is an owner of shares or other securities of any Member (other than securities purchased on the open market).
(ddd) To
the Company’s knowledge, no Company Affiliate has made a subordinated loan to any Member.
(eee) Except
as described in the Registration Statement, the Statutory Prospectus and the Prospectus, no proceeds from the sale of the Underwritten
Securities (excluding underwriting compensation as disclosed in the Registration Statement, Statutory Prospectus and the Prospectus)
will be paid by the Company to any Member, or any persons associated or affiliated with a Member.
(fff) The
Company has not issued any warrants or other securities, or granted any options, directly or indirectly to anyone who is a potential
underwriter in the Offering or a related person (as defined by FINRA rules) of such an underwriter within the 180-day period prior
to the initial confidential submission date of the Registration Statement.
(ggg) Except
as disclosed in the FINRA Questionnaires, no person to whom securities of the Company have been privately issued within the 180-day
period prior to the initial confidential submission date of the Registration Statement has to the Company’s knowledge any
relationship or affiliation or association with any Member.
(hhh) To
the Company’s knowledge, no Member intending to participate in the Offering has a conflict of interest with the Company.
For this purpose, a “conflict of interest” means, if at the time of the Member’s participation in the Offering,
any of the following applies: (A) the securities are to be issued by the Member; (B) the Company controls, is controlled
by or is under common control with the Member or the Member’s associated persons; (C) at least 5% of the net offering
proceeds, not including underwriting compensation, are intended to be: (i) used to reduce or retire the balance of a loan
or credit facility extended by the Member, its affiliates and its associated persons, in the aggregate; or (ii) otherwise
directed to the Member, its affiliates and associated persons, in the aggregate; or (D) as a result of the Offering and any
transactions contemplated at the time of the Offering: (i) the Member will be an affiliate of the Company; (ii) the Member
will become publicly owned; or (iii) the Company will become a Member or form a broker-dealer subsidiary.
(iii) 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 Securities.
(jjj) The
Company does not own an interest in any corporation, partnership, limited liability company, joint venture, trust or other entity.
(kkk) 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, 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 Act or the Exchange Act to be described in the Registration Statement, Statutory Prospectus
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 or directors of the Company or any of their respective family members, except as disclosed in the Registration Statement,
Statutory Prospectus and the Prospectus. 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 director or officer of the Company.
(lll) The
Company has not offered, or caused the Underwriters to offer, the Underwritten Securities 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.
(mmm) Upon
delivery and payment for the Securities on the Closing Date, the Company will not be subject to Rule 419 under the 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.
(nnn) 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 Execution Time, the Company has been and is an “emerging growth company,” as defined in Section 2(a) of
the 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 Act or Rule 163B under the Act.
(ooo) The
Company (i) has not alone engaged in any Testing-the-Waters Communication 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 Act or institutions that are accredited investors within the meaning of Rule 501 under the 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 any
Written Testing-the-Waters Communications other than those listed on Schedule III 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 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 any 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.
(ppp) The
Registration Statement, the Statutory Prospectus and the Prospectus comply with, and any further amendments or supplements thereto
will comply with, any applicable laws or regulations of any foreign jurisdiction in which the Statutory Prospectus or Prospectus
are distributed in connection with the Directed Unit Program; and no approval, authorization, consent or order of or filing with
any governmental or regulatory commission, board, body, authority or agency, other than those heretofore obtained, is required
in connection with the offering of the Reserved Units in any jurisdiction where the Reserved Units are being offered.
Any certificate signed by any officer of
the Company and delivered to the Representatives or counsel for the Underwriters in connection with the Offering shall be deemed
a representation and warranty by the Company, as to matters covered thereby, to each Underwriter.
2. PURCHASE
AND SALE.
(a) Subject
to the terms and conditions and in reliance upon the representations and warranties herein set forth, the Company agrees to sell
to each Underwriter, and each Underwriter agrees, severally and not jointly, to purchase from the Company, at a purchase price
of $9.80 per Security, the amount of the Underwritten Securities set forth opposite such Underwriter’s name in Schedule
I hereto.
(b) Subject
to the terms and conditions and in reliance upon the representations and warranties herein set forth, the Company hereby grants
an option to the several Underwriters to purchase, severally and not jointly, up to 3,000,000 Option Securities at the same purchase
price per Security as the Underwriters shall pay for the Underwritten Securities. Said option may be exercised only to cover over-allotments
in the sale of the Underwritten Securities by the Underwriters. Said option may be exercised in whole or in part at any time on
or before the 45th day after the date of the Prospectus upon written notice by the Representatives to the Company setting forth
the number of Option Securities as to which the several Underwriters are exercising the option and the Additional Closing Date.
The number of Option Securities to be purchased by each Underwriter shall be based upon the same percentage of the total number
of the Option Securities to be purchased by the several Underwriters as such Underwriter is purchasing of the Underwritten Securities,
subject to such adjustments as the Representatives in their absolute discretion shall make to eliminate any fractional shares.
(c) In
addition to the discount from the public offering price represented by the purchase price set forth in the first sentence of Section 2(a) of
this Agreement, the Company hereby agrees to pay to the Underwriters a deferred discount of $0.35 per Security (including both
Underwritten Securities and Option Securities) purchased hereunder, in such amounts as set forth opposite each Underwriter’s name
in Schedule I hereto (the “Deferred Discount”). The Deferred Discount will be paid directly to the Representatives,
on behalf of the Underwriters, by the trustee from amounts on deposit in the Trust Account by wire transfer payable in same-day
funds if and when the Company consummates its initial Business Combination. The Underwriters hereby agree that if no Business
Combination is consummated within the time period provided in the Trust Agreement and the funds held under the Trust Agreement
are distributed to the holders of the Common Stock included in the Securities sold pursuant to this Agreement (the “Public
Stockholders”), (i) the Underwriters will forfeit any rights or claims to the Deferred Discount and (ii) the trustee
under the Trust Agreement is authorized to distribute the Deferred Discount to the Public Stockholders on a pro rata basis.
3. DELIVERY
AND PAYMENT.
Delivery of
and payment for the Underwritten Securities and the Option Securities (if the option provided for in Section 2 hereof shall
have been exercised on or before the third Business Day prior to the Closing Date) shall be made at [˜]
a.m., New York City time, on [˜], 2020,
or at such time on such later date not more than three Business Days after the foregoing date as the Representatives shall designate,
which date and time may be postponed by agreement between the Representatives and the Company or as provided in Section 9
hereof (such date and time of delivery and payment for the Securities being herein called the “Closing Date”). Delivery
of the Securities shall be made to the Representatives for the respective accounts of the several Underwriters against payment
by the several Underwriters through the Representatives of the purchase price thereof by wire transfer payable in same-day funds
to an account specified by the Company and to the Trust Account as described below in this Section 3. Delivery of the Underwritten
Securities and the Option Securities shall be made through the facilities of The Depository Trust Company (“DTC”) unless
the Representatives shall otherwise instruct.
(a) Payment
for the Underwritten Securities shall be made as follows: up to $196,000,000 of the net proceeds for the Underwritten
Securities (including up to $7,000,000 of Deferred Discount) shall be deposited in the Trust Account pursuant to the terms of
the Trust Agreement along with such portion of the gross proceeds of the sale of the Private Placement Warrants (the
“Private Placement Portion”) in order for the Trust Account to equal the product of the number of Securities sold
and $10.10 per Underwritten Security upon delivery to the Representatives
of the Underwritten Securities through the facilities of DTC or, if the Representatives have otherwise instructed, upon
delivery to the Representatives of certificates (in form and substance satisfactory to the Representatives) representing the
Underwritten Securities, in each case for the account of the Underwriters. The Underwritten Securities shall be registered in
such name or names and in such authorized denominations as the Representatives may request in writing at least two Business
Days prior to the Closing Date. If delivery is not made through the facilities of DTC, the Company will permit the
Representatives to examine and package the Underwritten Securities for delivery, at least one Business Day prior to the
Closing Date. The Company shall not be obligated to sell or deliver the Underwritten Securities except upon tender of payment
by the Representatives for all the Underwritten Securities. Payment by the Underwriters for the Underwritten Securities is
contingent on the (i) payment by the Sponsor to the Company for the Private Placement Warrants and (ii) deposit of
the Private Placement Portion by or at the direction of the Company into the Trust Account, in each case at least one
Business Day prior to the Closing Date.
(b) Payment
for the Option Securities shall be made as follows: $9.80 per Option Security (including $0.35 per Option Security of Deferred
Discount) shall be deposited in the Trust Account pursuant to the terms of the Trust Agreement upon delivery to the Representatives
of the Option Securities through the facilities of DTC or, if the Representatives have otherwise instructed, upon delivery to the
Representatives of certificates (in form and substance satisfactory to the Representatives) representing the Option Securities
(or through the facilities of DTC) for the account of the Underwriters. The Option Securities shall be registered in such name
or names and in such authorized denominations as the Representatives may request in writing at least two Business Days prior to
the Closing Date. If delivery is not made through the facilities of DTC, the Company will permit the Representatives to examine
and package the Option Securities for delivery, at least one Business Day prior to the Closing Date. The Company shall not be obligated
to sell or deliver the Option Securities except upon tender of payment by the Representatives for all the Option Securities.
If the option provided for in Section 2
hereof is exercised after the third Business Day prior to the Closing Date, the Company will deliver the Option Securities (at
the expense of the Company) to the Representatives, at 1285 Avenue of the Americas, New York, New York 10019, on the date specified
by the Representatives (which shall be at least three Business Days after exercise of said option) for the respective accounts
of the several Underwriters, against payment by the several Underwriters through the Representatives of the purchase price thereof
to the Trust Account as described above in Section 3(b). If settlement for the Option Securities occurs after the Closing
Date, the Company will deliver to the Representatives on the Additional Closing Date for the Option Securities, and the obligation
of the Underwriters to purchase the Option Securities shall be conditioned upon receipt of, supplemental opinions, certificates
and letters confirming as of such date the opinions, certificates and letters delivered on the Closing Date pursuant to Section 6
hereof.
4. OFFERING
BY UNDERWRITERS.
It is understood that the several Underwriters
propose to offer the Securities for sale to the public as set forth in the Prospectus (the “Offering”).
5. AGREEMENTS.
The Company agrees with the several Underwriters
that:
(a) Prior
to the termination of the Offering, the Company will not file any amendment of the Registration Statement or supplement to the
Prospectus or any Rule 462(b) Registration Statement unless the Company has furnished you a copy for your review prior
to filing and will not file any such proposed amendment, supplement or Rule 462(b) Registration Statement to which you
reasonably object. The Company will cause the Prospectus, properly completed, and any supplement thereto to be filed in a form
approved by the Representatives with the Commission pursuant to the applicable paragraph of Rule 424(b) within the time
period prescribed and will provide evidence satisfactory to the Representatives of such timely filing. The Company will promptly
advise the Representatives (i) when the Prospectus, and any supplement thereto, shall have been filed (if required) with the
Commission pursuant to Rule 424(b) or when any Rule 462(b) Registration Statement or any Written Testing-the-Waters
Communication shall have been filed with the Commission, (ii) when, prior to termination of the Offering, any amendment to
the Registration Statement shall have been filed or become effective, (iii) of any request by the Commission or its staff
for any amendment of the Registration Statement, any Rule 462(b) Registration Statement or any Written Testing-the-Waters
Communication or for any supplement to the Prospectus or for any additional information, (iv) of the issuance by the Commission
of any stop order suspending the effectiveness of the Registration Statement or any order preventing or suspending the use of the
Preliminary Prospectus, the Prospectus or any Written Testing-the-Waters Communication, or of the institution of any proceedings
for that purpose or pursuant to Section 8A of the Act and (v) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Securities for sale in any jurisdiction or the institution or threatening
of any proceeding for such purpose. The Company will use its best efforts to prevent the issuance of any such stop order or the
occurrence of any such suspension or objection to the use of the Registration Statement and, upon such issuance, occurrence or
notice of objection, to obtain as soon as possible the withdrawal of such stop order or relief from such occurrence or objection,
including, if necessary, by filing an amendment to the Registration Statement or a new registration statement and using its best
efforts to have such amendment or new registration statement declared effective as soon as practicable.
(b) If,
at any time prior to the filing of the Prospectus pursuant to Rule 424(b), any event or development occurs as a result of
which the Statutory Prospectus 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 under which they were made at such time not misleading,
the Company will (i) notify promptly the Representatives so that any use of the Statutory Prospectus may cease until it is
amended or supplemented; (ii) amend or supplement the Statutory Prospectus to correct such statement or omission in a form
reasonably acceptable to the Representatives; and (iii) supply any amendment or supplement to you in such quantities as you
may reasonably request.
(c) If,
at any time when a prospectus relating to the Securities is required to be delivered under the Act (including in circumstances
where such requirement may be satisfied pursuant to Rule 172), any event or development occurs as a result of which the Prospectus
as then 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 under which they were made at such time not misleading, or if
it shall be necessary to amend the Registration Statement or supplement the Prospectus to comply with the Act or the rules thereunder,
the Company promptly will (i) notify the Representatives of any such event; (ii) prepare and file with the Commission,
subject to the first two sentences of paragraph (a) of this Section 5, an amendment or supplement that will correct such
statement or omission or effect such compliance; and (iii) supply any supplemented Prospectus to you in such quantities as
you may reasonably request.
(d) The
Company will make generally available to its security holders and to the Representatives an earnings statement or statements of
the Company and its subsidiaries that will satisfy the provisions of Section 11(a) of the Act and Rule 158.
(e) The
Company will not make any offer relating to the Securities that constitutes or would constitute a Free Writing Prospectus or a
portion thereof required to be filed by the Company with the Commission or retained by the Company under Rule 433 of the Act.
(f) The
Company will furnish to the Representatives and counsel for the Underwriters, without charge, signed copies of the Registration
Statement (including exhibits thereto) and to each other Underwriter a copy of the Registration Statement (without exhibits thereto)
and, so long as delivery of a prospectus by an Underwriter or dealer may be required by the Act (including in circumstances where
such requirement may be satisfied pursuant to Rule 172), as many copies of each Preliminary Prospectus, the Prospectus and
any supplement thereto as the Representatives may reasonably request. The Company will pay the expenses of printing or other production
of all documents relating to the Offering.
(g) The
Company will arrange, if necessary, for the qualification of the Securities for sale under the laws of such jurisdictions as the
Representatives may designate and will maintain such qualifications in effect so long as required for the distribution of the
Securities; provided that in no event shall the Company be obligated to qualify to do business in any jurisdiction where
it is not now so qualified or to take any action that would subject it to service of process in suits, other than those arising
out of the offering or sale of the Securities, in any jurisdiction where it is not now so subject.
(h) (1) The
Company will not, without the prior written consent of the Representatives, (x) offer, sell, contract to sell, pledge or otherwise
dispose of (or enter into any transaction that is designed to, or might reasonably be expected to, result in the disposition (whether
by actual disposition or effective economic disposition due to cash settlement or otherwise) by the Company or any affiliate of
the Company or any person in privity with the Company or any affiliate of the Company, in each case, other than those entities
or individuals that have executed the Insider Letter), directly or indirectly, including the filing (or participation in the filing)
of a registration statement with the Commission in respect of, or establish or increase a put equivalent position or liquidate
or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act with respect to, any other securities,
shares of Common Stock, Warrants or any securities convertible into, or exercisable, or exchangeable for, shares of Common Stock
or publicly announce an intention to effect any such transaction during the period commencing on the date hereof and ending 180
days after the date of this Agreement; provided, however, that the Company may (1) issue and sell the Private
Placement Warrants, (2) issue and sell the Option Securities on exercise of the option provided for in Section 2 hereof,
(3) register with the Commission pursuant to the Registration Rights Agreement, in accordance with the terms of the Registration
Rights Agreement, the resale of the securities covered thereby and (4) issue securities in connection with a Business Combination,
or (y) release the Sponsor or any officer or director of the Company from the 180-day lock-up contained in the Insider Letter.
(2) The
Company agrees with each of the Underwriters to cause each Directed Unit Participant who purchases over $1,000,000 of Reserved
Units to execute a lock-up agreement (a “Directed Unit Program Lock-Up Agreement”), and to direct the transfer
agent of the Company’s Securities to place stop transfer restrictions upon such Reserved Units during the lock-up period
described in such Directed Unit Program Lock-Up Agreement; and to comply with all applicable securities and other laws, rules and
regulations in each jurisdiction in which such Reserved Units are offered in connection with the Directed Unit Program.
(i) The
Company will not take, 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 Securities.
(j) The
Company agrees to pay the costs and expenses relating to the following matters: (i) the preparation, printing or reproduction
and filing with the Commission of the Registration Statement (including financial statements and exhibits thereto), each Preliminary
Prospectus, the Prospectus and each amendment or supplement to any of them; (ii) the printing (or reproduction) and delivery
(including postage, air freight charges and charges for counting and packaging) of such copies of the Registration Statement, each
Preliminary Prospectus, the Prospectus and all amendments or supplements to any of them, as may, in each case, be reasonably requested
for use in connection with the offering and sale of the Securities; (iii) the preparation, printing, authentication, issuance
and delivery of certificates for the Securities, including any stamp or transfer taxes in connection with the original issuance
and sale of the Securities; (iv) the printing (or reproduction) and delivery of this Agreement and all other agreements or
documents printed (or reproduced) and delivered in connection with the Offering; (v) the registration of the Securities under
the Exchange Act and the listing of the Securities on Nasdaq; (vi) the printing and delivery of a preliminary blue sky memorandum,
any registration or qualification of the Securities for offer and sale under the securities or blue sky laws of the several states,
and any filings required to be made with FINRA (including filing fees and the reasonable and documented fees and expenses of counsel
for the Underwriters relating to such filings, memorandum, registration and qualification in an aggregate amount up to $25,000);
(vii) the transportation and other expenses incurred by or on behalf of the Company (and not the Underwriters) in connection
with presentations to prospective purchasers of the Securities; (ix) the fees and expenses of the Company’s accountants
and the fees and expenses of counsel for the Company; and (x) all other costs and expenses incident to the performance by
the Company of its obligations hereunder.
(k) For
a period commencing on the Effective Date and ending five (5) 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 its best efforts to maintain the registration
of the Common Stock (or such other security into which shares of 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 a Business
Combination. The Company will not deregister the Common Stock under the Exchange Act (except in connection with an exchange of
the shares of Common Stock pursuant to a Business Combination or a going private transaction after the completion of a Business
Combination) without the prior written consent of the Representatives.
(l) 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 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 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 Securities and its receipt of the proceeds therefrom.
(m) For
a period commencing on the Effective Date and ending five (5) years from the date of the consummation of the Business Combination
or until such earlier time at which the Liquidation occurs or the shares of Common Stock and 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.
(n) For
a period commencing on the Effective Date and ending five (5) 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; 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 on the Commission’s EDGAR website
will be considered furnished for the purposes of this section.
(o) For
a period commencing on the Effective Date and ending five (5) years from the date of the consummation of the Business Combination
or until such earlier time at which the Liquidation occurs or the shares of Common Stock and Warrants cease to be publicly traded,
the Company shall retain a transfer and warrant agent.
(p) In
no event will the amounts payable by the Company for office space, administrative and support services exceed $20,000 per month
in the aggregate until the earlier of the date of the consummation of the Business Combination or the Liquidation.
(q) The
Company will not consummate a Business Combination with any entity that is affiliated with the Sponsor or any of the Company’s
officers or directors unless it obtains an opinion from an independent investment banking firm or another independent entity that
commonly renders valuation opinions that such 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 for services rendered to the Company prior to, or in connection with, the consummation of a Business Combination;
provided however, that 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 to the extent that such expenses do not exceed the
amount of available proceeds not deposited in the Trust Account; (ii) may be repaid loans as described in the Registration
Statement; and (iii) may be paid $20,000 per month for office space, administrative and support services pursuant to the Administrative
Services Agreement between the Company and the Sponsor.
(r) The
Company will apply the net proceeds from the Offering and the sale of the Private Placement Warrants received by it in a manner
consistent in all material respects with the applications described under the caption “Use of proceeds” in the Statutory
Prospectus and the Prospectus.
(s) For
a period of 90 days following the Effective Date, 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.
(t) The
Company shall advise FINRA, the Representatives and their counsel if it is aware that any 5% or greater stockholder of the Company
becomes an affiliate or associated person of a Member participating in the distribution of the Securities.
(u) 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
Statutory Prospectus 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 a Business Combination, it will not be required
to register as an investment company under the Investment Company Act.
(v) During
the period prior to the Company’s initial Business Combination or Liquidation, the Company may instruct the trustee under
the Trust Agreement to release from the Trust Account, solely from interest income earned on funds held in the Trust Account, amounts
to pay income tax and franchise tax obligations. Otherwise, all funds held in the Trust Account (including any interest income
earned on the amounts held in the Trust Account (which interest shall be net of any taxes payable)) will remain in the Trust Account
until the earlier of (a) the completion of the Company’s initial Business Combination, (b) the redemption of any
shares of Public Stock (as defined below) properly tendered in connection with a stockholder vote to amend the Company’s
Amended and Restated Certificate of Incorporation (i) 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 its shares of Public Stock if it does
not complete its initial Business Combination within the time frame prescribed in the Amended and Restated Certificate of Incorporation,
or (ii) with respect to any other provisions relating to stockholders’ rights or pre-initial business combination activity,
and (c) the redemption of the Company’s shares of Public Stock if it is unable to complete a Business Combination within
the time frame prescribed in the Amended and Restated Certificate of Incorporation, subject to applicable law; 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 outside of the Trust Account are not sufficient to cover the costs and expenses associated with implementing
the Company’s plan of dissolution.
(w) The
Company will reserve and keep available that maximum number of its authorized but unissued securities that are issuable upon exercise
of any of the Warrants and Private Placement Warrants, collectively, outstanding from time to time and the conversion of the Founder
Shares.
(x) Prior
to the consummation of a Business Combination or the Liquidation, the Company shall not issue any shares of Common Stock, Warrants
or any options or other securities convertible into shares of Common Stock, or any preferred shares, in each case, that participate
in any manner in the Trust Account or that vote as a class with the shares of Common Stock on a Business Combination.
(y) Prior
to the consummation of a Business Combination or the Liquidation, the Company’s audit committee will review on a quarterly
basis all payments made to the Sponsor, to the Company’s officers or directors, or to the Company’s or any of such
other persons’ respective affiliates.
(z) The
Company agrees that it will use commercially reasonable efforts to prevent the Company from becoming subject to Rule 419 under
the 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 3a-51-1
under the Exchange Act during such period.
(aa) To
the extent required by Rule 13a-15 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.
(bb) The
Company will use commercially reasonable efforts to effect and maintain the listing of the Securities, shares of Common Stock and
Warrants on Nasdaq (or another national securities exchange) prior to the consummation of the Business Combination.
(cc) 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 Nasdaq’s listing rules.
(dd) 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 or Bylaws.
(ee) The
Company will seek to have all vendors, service providers (other than independent accountants), prospective target businesses, lenders
or other entities with which it does business enter into agreements 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 shall have received the approval of its Chief Executive Officer.
(ff) The
Company may consummate the initial Business Combination and conduct redemptions of shares of Common Stock for cash upon consummation
of such Business Combination without a stockholder vote pursuant to Rule 13e-4 and Regulation 14E of 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 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 certain of the proceeds from the
sale of the Private Placement Warrants and (y) any interest income earned on the funds held in the Trust Account not previously
released to the Company to pay franchise and income taxes, divided by (B) the total number of shares of Common Stock sold
as part of the Securities in the Offering (the “Public Stock”) then outstanding. If, however, a stockholder vote is
required by 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 legal 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, the Sponsor and the Company’s officers and directors have agreed to vote all of their Founder Shares and any other
shares of Common Stock purchased during or after the Offering 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 holding
shares of Common Stock 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 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 Warrants and (2) any
interest income earned on the funds held in the Trust Account not previously released to the Company to pay franchise and income
taxes, divided by (II) the total number of shares of Public Stock 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 of Common Stock and Founder 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 affirmatively requested such redemption. Only Public Stockholders
holding shares of Common Stock 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 and Bylaws, 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 within the time frame prescribed in the 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 (10) Business Days thereafter, redeem 100% of the Public Stock, at a
per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account (including interest not previously
released to the Company to pay franchise and income taxes, and less up to $100,000 of interest to pay dissolution expenses), divided
by the number of then outstanding shares of Public Stock, which redemption will completely extinguish Public Stockholders’
rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and
(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 Securities 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 the Company. The Sponsor and
the Company’s officers and directors have agreed that they will not propose any amendment to the Amended and Restated Certificate
of Incorporation that would affect 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 shares of Public Stock if the Company has not consummated
a Business Combination within the time frame prescribed in the Amended and Restated Certificate of Incorporation, or with respect
to any other provisions relating to stockholders’ rights or pre-initial business combination activity, unless the Company
offers to redeem the shares of Public Stock in connection with such amendment, as described in the Statutory Prospectus and Prospectus.
(gg) In
the event that the Company desires or is required by an applicable law or regulation to cause an announcement (“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 with the Commission announcing the consummation of the 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.
(hh) Upon
the consummation of the initial Business Combination, the Company and the Representatives will jointly direct the Trustee to pay
the Representatives, on behalf of the Underwriters, the Deferred Discount out of the proceeds of the Offering held in the Trust
Account. The Underwriters shall have no claim to payment of any interest earned on the portion of the proceeds held in the Trust
Account representing the Deferred Discount. If the Company fails to consummate its initial Business Combination within the time
frame prescribed in the Amended and Restated Certificate of Incorporation, the Deferred Discount will not be paid to the Representatives
and will, instead, be included in the Liquidation distribution of the proceeds held in the Trust Account made to the Public Stockholders.
In connection with any such Liquidation, the Underwriters forfeit any rights or claims to the Deferred Discount.
(ii) The
Company will endeavor in good faith, in cooperation with the Representatives to qualify the Securities for offering and sale under
the securities laws of such jurisdictions as the Representatives may reasonably designate and will maintain such qualifications
in effect so long as required for the distribution of the Securities, provided that no such qualification shall be required in
any jurisdiction where, as a result thereof, the Company would be subject to service of general process or to taxation as a foreign
corporation doing business in such jurisdiction. Until the earliest of (i) the date on which all Underwriters shall have ceased
to engage in market-making activities in respect of the Securities, (ii) the date on which the Securities are listed on Nasdaq
(or any successor thereto), (iii) a going private transaction after the completion of a Business Combination, and (iv) the
date of the liquidation of the Company, in each jurisdiction where such qualification shall be effected, the Company will, unless
the Representatives agree that such action is not at the time necessary or advisable, use all reasonable efforts to file and make
such statements or reports at such times as are or may be required to qualify the Securities for offering and sale under the securities
laws of such jurisdiction.
(jj) 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 light of the circumstances
under which they were made at such 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) The
Company will deliver to each Underwriter (or its agent) a properly completed and executed Certification Regarding Beneficial Owners
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.
(ll) 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 Securities within the meaning of the Act and (ii) completion of the
180-day restricted period referred to in Section 5(h) hereof.
(mm) Upon
the earlier to occur of the expiration or termination of the Underwriters’ over-allotment option, the Company shall cancel
or otherwise effect the forfeiture of Founder Shares from the Sponsor, in an aggregate amount equal to the number of Founder Shares
determined by multiplying (a) 750,000 by (b) a fraction, (i) the numerator of which is 3,000,000 minus the number
of shares of Common Stock purchased by the Underwriters upon the exercise of their over-allotment option, and (ii) the denominator
of which is 3,000,000. 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 subsection.
6. CONDITIONS
TO THE OBLIGATIONS OF THE UNDERWRITERS.
The obligations of the Underwriters to purchase
the Underwritten Securities and the Option Securities, as the case may be, shall be subject to the accuracy of the representations
and warranties on the part of the Company contained herein as of the Execution Time, the Closing Date and any Additional Closing
Date pursuant to Section 3 hereof, to the accuracy of the statements of the Company made in any certificates pursuant to the
provisions hereof, to the performance by the Company of its obligations hereunder and to the following additional conditions:
(a) The
Prospectus, and any supplement thereto, have been filed in the manner and within the time period required by Rule 424(b);
and no stop order suspending the effectiveness of the Registration Statement or any notice objecting to its use shall have been
issued and no proceedings for that purpose shall have been instituted or threatened.
(b) The
Company shall have requested and caused Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the Company, to have furnished
to the Representatives its opinions dated the Closing Date and addressed to the Representatives, in a form reasonably acceptable
to the Representatives.
(c) The
Representatives shall have received from Ropes & Gray LLP, counsel for the Underwriters, such opinion or opinions, dated
the Closing Date and addressed to the Representatives, with respect to the issuance and sale of the Securities, the Registration
Statement, the Statutory Prospectus, the Prospectus (together with any supplement thereto) and other related matters as the Representatives
may reasonably require, and the Company shall have furnished to such counsel such documents as they request for the purpose of
enabling them to pass upon such matters.
(d) The
Company shall have furnished to the Representatives a certificate of the Company, signed by the Chief Executive Officer and the
principal financial or accounting officer of the Company, dated the Closing Date, to the effect that the signer of such certificate
has carefully examined the Registration Statement, each Preliminary Prospectus, the Prospectus and any amendment or supplement
thereto, and this Agreement and that:
(i) the
representations and warranties of the Company in this Agreement are true and correct on and as of the Closing Date with the same
effect as if made on the Closing Date and the Company has complied with all the agreements and satisfied all the conditions on
its part to be performed or satisfied at or prior to the Closing Date;
(ii) no
stop order suspending the effectiveness of the Registration Statement or any notice objecting to its use has been issued and no
proceedings for that purpose have been instituted or, to the Company’s knowledge, threatened; and
(iii) since
the date of the most recent financial statements included in the Statutory Prospectus and the Prospectus (exclusive of any supplement
thereto), there has been no Material Adverse Effect, except as set forth in or contemplated in the Statutory Prospectus and the
Prospectus (exclusive of any supplement thereto).
(e) The
Company shall have requested and caused Withum to have furnished to the Representatives, at the Execution Time and at the Closing
Date, letters, dated respectively as of the Execution Time and as of the Closing Date, in form and substance 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 Statutory Prospectus 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) Subsequent
to the Execution Time or, if earlier, the dates as of which information is given in the Registration Statement (exclusive of any
amendment thereof), the Statutory Prospectus and the Prospectus (exclusive of any supplement thereto), there shall not have been
(i) any change or decrease specified in the letter or letters referred to in paragraph (e) of this Section 6 or
(ii) any change, or any development involving a prospective change, in or affecting the earnings, business, management, properties,
assets, rights, operations, condition (financial or otherwise) or prospects of the Company, whether or not arising from transactions
in the ordinary course of business, except as set forth in or contemplated in the Statutory Prospectus and the Prospectus (exclusive
of any supplement thereto) the effect of which, in any case referred to in clause (i) or (ii) above, is, in the sole
judgment of the Representatives, so material and adverse as to make it impractical or inadvisable to proceed with the offering
or delivery of the Securities as contemplated by the Registration Statement (exclusive of any amendment thereof), the Statutory
Prospectus and the Prospectus (exclusive of any supplement thereto).
(g) Prior
to the Closing Date, the Company shall have furnished to the Representatives such further information, certificates and documents
as the Representatives may reasonably request.
(h) 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.
(i) The
Securities shall be duly listed subject to notice of issuance on Nasdaq, satisfactory evidence of which shall have been provided
to the Representatives.
(j) On
or prior to the Closing Date, the Company shall have delivered to the Representatives executed copies of the Trust Agreement, the
Warrant Agreement, the Founder’s Purchase Agreement, the Warrant Subscription Agreement, the Insider Letter, the Registration
Rights Agreement and the Administrative Services Agreement.
(k) [Reserved].
(l) At
least one Business Day prior to the Closing Date, the Sponsor shall have caused $6,000,000 of the purchase price for the Private
Placement Warrants to be deposited into the Trust Account and the remaining $2,000,000 to be paid to the Company.
(m) No
order preventing or suspending the sale of the Securities in any jurisdiction designated by the Representatives pursuant to Section 5(ii) hereof
shall have been issued as of the Closing Date, and no proceedings for that purpose shall have been instituted or shall have been
threatened.
If any of the conditions specified in this
Section 6 shall not have been fulfilled when and as provided in this Agreement, or if any of the opinions and certificates
mentioned above or elsewhere in this Agreement shall not be reasonably satisfactory in form and substance to the Representatives
and counsel for the Underwriters, this Agreement and all obligations of the Underwriters hereunder may be canceled at, or at any
time prior to, the Closing Date by the Representatives. Notice of such cancellation shall be given to the Company in writing or
by telephone or facsimile confirmed in writing.
The documents required to be delivered by
this Section 6 shall be delivered at the office of Ropes & Gray LLP, counsel for the Underwriters, at 1211 Avenue
of the Americas New York, New York 10036, Attention: Paul D. Tropp and Rachel D. Phillips, unless otherwise indicated herein, on
the Closing Date.
7. REIMBURSEMENT
OF UNDERWRITERS’ EXPENSES.
If the sale of the Securities provided for
herein is not consummated because any condition to the obligations of the Underwriters set forth in Section 6 hereof is not
satisfied, because of any termination pursuant to Section 10 hereof (other than clauses (ii), (iii) or (vi) thereof)
or because of any refusal, inability or failure on the part of the Company to perform any agreement herein or comply with any provision
hereof other than by reason of a default by any of the Underwriters, the Company will reimburse the Underwriters severally through
the Representatives on demand for all reasonable out-of-pocket expenses (including reasonable fees and disbursements of counsel)
that shall have been incurred by them in connection with the proposed purchase and sale of the Securities.
8. INDEMNIFICATION
AND CONTRIBUTION.
(a) The
Company agrees to indemnify and hold harmless each Underwriter, the directors, officers, employees and agents of each Underwriter,
each person who controls any Underwriter within the meaning of either the Act or the Exchange Act and each affiliate of each Underwriter
against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject under
the Act, the Exchange Act or other Federal or state statutory law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of a material fact contained in the Registration Statement for the registration of the Securities as originally
filed or in any amendment thereof, or in any Preliminary Prospectus, the Statutory Prospectus, the Prospectus, any “roadshow”
as defined in Section 433(h) of the Act or any Written Testing-the-Waters Communication or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading or (ii) the Directed Unit Program, except
with respect to this clause (ii), insofar as such losses, claims, damages or liabilities is finally judicially determined to have
resulted from the gross negligence or willful misconduct of the Underwriters in conducting the Directed Unit Program, and agrees
to reimburse each such indemnified party, as incurred, for any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability or action (whether or not such indemnified party is a party
thereto), whether threatened or commenced, and in connection with the enforcement of this provision with respect to any of the
above; provided, however, that the Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with written information furnished to the Company by or on behalf
of any Underwriter through the Representatives specifically for inclusion therein, it being understood and agreed that the only
such information furnished by any Underwriter consists of the information described in the last sentence of Section 8(b) hereof.
This indemnity agreement will be in addition to any liability that the Company may otherwise have.
Without limitation of and in addition to
its obligations under the other paragraphs of this Section 8, the Company agrees to indemnify, defend and hold harmless UBS-FinSvc
and its partners, directors, officers and members, and any person who controls UBS-FinSvc within the meaning of Section 15
of the Act or Section 20 of the Exchange Act, and the successors and assigns of all of the foregoing persons (each of the
foregoing, a “UBS-FinSvc Affiliate”), from and against any loss, damage, expense, liability or claim (including the
reasonable cost of investigation) which, jointly or severally, UBS-FinSvc or any such person may incur under the Act, the Exchange
Act, the common law or otherwise, insofar as such loss, damage, expense, liability or claim (1) arises out of or is based
upon (A) any of the matters referred to in clauses (i) and (ii) of the first paragraph of this Section 8(a),
or (B) any untrue statement or alleged untrue statement of a material fact contained in any material prepared by or on behalf
or with the consent of the Company for distribution to Directed Unit Participants in connection with the Directed Unit Program
or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading; (2) is or was caused by the failure of any Directed Unit Participant to pay for and
accept delivery of Reserved Units that the Directed Unit Participant has agreed to purchase; or (3) otherwise arises out of
or is based upon the Directed Unit Program, provided, however, that the Company shall not be required to hold harmless or responsible
for any loss, damage, expense, liability or claim that is finally judicially determined to have resulted from the gross negligence
or willful misconduct of UBS-FinSvc or any UBS-FinSvc Affiliate.
(b) Each
Underwriter severally and not jointly agrees to indemnify and hold harmless the Company, each of its directors, each of its officers
who signs the Registration Statement, and each person who controls the Company within the meaning of either the Act or the Exchange
Act, to the same extent as the foregoing indemnity from the Company to each Underwriter, but only with reference to written information
relating to such Underwriter furnished to the Company by or on behalf of such Underwriter through the Representatives specifically
for inclusion in the documents referred to in the foregoing indemnity. This indemnity agreement will be in addition to any liability
that any Underwriter may otherwise have. The Company acknowledges that the following information set forth under the heading “Underwriting”
in the Preliminary Prospectus, the Statutory Prospectus and the Prospectus constitutes the only information furnished in writing
by or on behalf of the several Underwriters for inclusion in the documents referred to in the foregoing indemnity: the list of
Underwriters and their respective roles and participation in the sale of the Securities and [ ].
(c) Promptly
after receipt by an indemnified party under this Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party under this Section 8, notify the indemnifying
party in writing of the commencement thereof; but the failure so to notify the indemnifying party (i) will not relieve it
from liability under paragraph (a) or (b) above unless and to the extent it did not otherwise learn of such action and
such failure results in the forfeiture by the indemnifying party of material rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided
in paragraph (a) or (b) above. The indemnifying party shall be entitled to appoint counsel of the indemnifying party’s
choice at the indemnifying party’s expense to represent the indemnified party in any action for which indemnification is
sought (in which case the indemnifying party shall not thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below); provided, however, that such counsel shall be satisfactory
to the indemnified party. Notwithstanding the indemnifying party’s election to appoint counsel to represent the indemnified
party in an action, the indemnified party shall have the right to employ separate counsel (including local counsel), and the indemnifying
party shall bear the reasonable fees, costs and expenses of such separate counsel if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such counsel with a conflict of interest, (ii) the actual
or potential defendants in, or targets of, any such action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties
that are different from or additional to those available to the indemnifying party, (iii) the indemnifying party shall not
have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice
of the institution of such action or (iv) the indemnifying party shall authorize the indemnified party to employ separate
counsel at the expense of the indemnifying party. An indemnifying party will not, without the prior written consent of the indemnified
parties (which consent shall not be unreasonably withheld, delayed or conditioned), settle or compromise or consent to the entry
of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification
or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or
action) unless (i) such settlement, compromise or consent includes an unconditional release of each indemnified party from
all liability arising out of such claim, action, suit or proceeding and (ii) does not include a statement as to or an admission
of fault, culpability or a failure to act by or on behalf of any indemnified party. If at any time an indemnified party shall have
requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel, such indemnifying party agrees
that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party
shall have received notice of the terms of such settlement at least 45 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in accordance with such request prior to the date of such settlement.
(d) In
the event that the indemnity provided in paragraph (a) or (b) of this Section 8 is unavailable to or insufficient
to hold harmless an indemnified party for any reason, the Company and the Underwriters severally agree to contribute to the aggregate
losses, claims, damages and liabilities (including legal or other expenses reasonably incurred in connection with investigating
or defending the same) (collectively “Losses”) to which the Company and one or more of the Underwriters may be subject
in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and by the Underwriters
on the other from the Offering; provided, however, that in no case shall any Underwriter (except as may be provided
in any agreement among underwriters relating to the Offering) be responsible for any amount in excess of the underwriting discount
or commission applicable to the Securities purchased by such Underwriter hereunder. If the allocation provided by the immediately
preceding sentence is unavailable for any reason, the Company and the Underwriters severally shall contribute in such proportion
as is appropriate to reflect not only such relative benefits but also the relative fault of the Company on the one hand and of
the Underwriters on the other in connection with the statements or omissions that resulted in such Losses as well as any other
relevant equitable considerations. Benefits received by the Company shall be deemed to be equal to the total net proceeds from
the Offering (before deducting expenses) received by it, and benefits received by the Underwriters shall be deemed to be equal
to the total underwriting discounts and commissions, in each case as set forth on the cover page of the Prospectus. Relative
fault shall be determined by reference to, among other things, whether any untrue or any alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to information provided by the Company on the one hand
or the Underwriters on the other, the intent of the parties and their relative knowledge, access to information and opportunity
to correct or prevent such untrue statement or omission. The Company and the Underwriters agree that it would not be just and equitable
if contribution were determined by pro rata allocation or any other method of allocation that does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this paragraph (d), no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. The Underwriters’ obligations in this subsection (d) to contribute are several
in proportion to their respective underwriting obligations and not joint. For purposes of this Section 8, each person who
controls an Underwriter within the meaning of either the Act or the Exchange Act and each director, officer, employee and agent
of an Underwriter shall have the same rights to contribution as such Underwriter, and each person who controls the Company within
the meaning of either the Act or the Exchange Act, each officer of the Company who shall have signed the Registration Statement
and each director of the Company shall have the same rights to contribution as the Company, subject in each case to the applicable
terms and conditions of this paragraph (d).
(e) In
any proceeding relating to the Registration Statement, the Preliminary Prospectus, the Statutory Prospectus, any Written Testing-the-Waters
Communication, the Prospectus or any supplement or amendment thereto, each party against whom contribution may be sought under
this Section 8 hereby consents to the exclusive jurisdiction of (i) the federal courts of the United States of America
located in the City and County of New York, Borough of Manhattan and (ii) the courts of the State of New York located in the
City and County of New York, Borough of Manhattan (collectively, the “Specified Courts”), agrees that process issuing
from such courts may be served upon it by any other contributing party and consents to the service of such process and agrees that
any other contributing party may join it as an additional defendant in any such proceeding in which such other contributing party
is a party.
(f) Any
losses, claims, damages, liabilities or expenses for which an indemnified party is entitled to indemnification or contribution
under this Section 8 shall be paid by the indemnifying party to the indemnified party as such losses, claims, damages, liabilities
or expenses are incurred. The indemnity and contribution agreements contained in this Section 8 and the representations and
warranties of the Company set forth in this Agreement shall remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Underwriter, its directors or officers or any person controlling any Underwriter, the
Company, its directors or officers or any persons controlling the Company, (ii) acceptance of any Securities and payment therefor
hereunder, and (iii) any termination of this Agreement. A successor to any Underwriter, its directors or officers or any person
controlling any Underwriter, or to the Company, its directors or officers, or any person controlling the Company, shall be entitled
to the benefits of the indemnity, contribution and reimbursement agreements contained in this Section 8.
9. DEFAULT
BY AN UNDERWRITER .
If any one or more Underwriters shall fail
to purchase and pay for any of the Securities agreed to be purchased by such Underwriter or Underwriters hereunder and such failure
to purchase shall constitute a default in the performance of its or their obligations under this Agreement, the remaining Underwriters
shall be obligated severally to take up and pay for (in the respective proportions that the amount of Securities set forth opposite
their names in Schedule I hereto bears to the aggregate amount of Securities set forth opposite the names of all the remaining
Underwriters) the Securities that the defaulting Underwriter or Underwriters agreed but failed to purchase; provided, however,
that in the event that the aggregate amount of Securities that the defaulting Underwriter or Underwriters agreed but failed to
purchase shall exceed 10% of the Underwritten Securities, the remaining Underwriters shall have the right to purchase all, but
shall not be under any obligation to purchase any, of the Securities. If within one Business Day after such default relating to
more than 10% of the Underwritten Securities the remaining Underwriters do not arrange for the purchase of such Underwritten Securities,
then the Company shall be entitled to a further period of one Business Day within which to procure another party or parties reasonably
satisfactory to you to purchase said Underwritten Securities. In the event that neither the remaining Underwriters nor the Company
purchase or arrange for the purchase of all of the Underwritten Securities to which a default relates as provided in this Section 9,
this Agreement will terminate without liability to any nondefaulting Underwriter or the Company. In the event of a default by any
Underwriter as set forth in this Section 9, the Closing Date shall be postponed for such period, not exceeding five Business
Days, as the Representatives shall determine in order that the required changes in the Registration Statement and the Prospectus
or in any other documents or arrangements may be effected. Nothing contained in this Agreement shall relieve any defaulting Underwriter
of its liability, if any, to the Company and any nondefaulting Underwriter for damages occasioned by its default hereunder.
10. TERMINATION.
This Agreement shall be subject to termination
in the absolute discretion of the Representatives, by notice given to the Company prior to delivery of and payment for the Securities,
if at any time prior to such delivery and payment (i) trading in the Company’s Securities, Common Stock or Warrants
shall have been suspended by the Commission, or trading in securities generally on the New York Stock Exchange or Nasdaq shall
have been suspended or limited or minimum prices shall have been established on such exchange or trading market, (ii) a banking
moratorium shall have been declared either by Federal or New York State authorities, (iii) there shall have occurred any outbreak
or escalation of hostilities, declaration by the United States of a national emergency or war, or other national or international
calamity or crisis (including, without limitation, an act of terrorism) or change in economic or political conditions the effect
of which on financial markets is such as to make it, in the sole judgment of the Representatives, impractical or inadvisable to
proceed with the offering or delivery of the Securities as contemplated by the Statutory Prospectus or the Prospectus (exclusive
of any supplement thereto), (iv) since the respective dates as of which information is given in the Registration Statement,
the Statutory Prospectus and the Prospectus, any material adverse change or any development involving a prospective material adverse
change in or affecting the earnings, business, management, properties, assets, rights, operations, condition (financial or otherwise)
or prospects of the Company, whether or not arising in the ordinary course of business, (v) the enactment, publication, decree
or other promulgation of any statute, regulation, rule or order of any court or other governmental authority which in your
opinion materially and adversely affects or may materially and adversely affect the business or operations of the Company, or (vi) the
taking of any action by any governmental body or agency in respect of its monetary or fiscal affairs which in your opinion has
a material adverse effect on the securities markets in the United States.
11. REPRESENTATIONS
AND INDEMNITIES TO SURVIVE.
The respective agreements, representations,
warranties, indemnities and other statements of the Company or its officers and of the Underwriters set forth in or made pursuant
to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of any Underwriter
or the Company or any of the officers, directors, employees, agents or controlling persons referred to in Section 8 hereof,
and will survive delivery of and payment for the Securities. The provisions of Sections 7 and 8 hereof shall survive the termination
or cancellation of this Agreement.
12. NOTICES .
All communications hereunder will be
in writing and effective only on receipt, and, if sent to the Representatives, will be mailed, delivered or telefaxed to UBS
Securities LLC, 1285 Avenue of the Americas, New York, New York 10019, Attention: Syndicate (fax: (212) 713-3371), to Stifel,
Nicolaus & Company, Incorporated, 1 South Street, 15th Floor, Baltimore, Maryland 21202, Attention: Syndicate
(fax: (443) 224-1273) and to BTIG, LLC, 65 E 55th Street, New York, New York 10022, Attention: General Counsel
(fax: (415) 248-2260), with a copy to Ropes & Gray LLP, 1211 Avenue of the Americas New York, New York 10036,
Attention: Paul D. Tropp and Rachel D. Phillips; or, if sent to the Company, will be mailed, delivered or telefaxed to KINS
Technology Group Inc., Four Palo Alto Square, Suite 200, 3000 El Camino Real, Palo Alto, California 94306, Attention:
Chief Executive Officer, with a copy to the Company’s counsel at Skadden, Arps, Slate, Meagher & Flom LLP, 525
University Avenue, Suite 1400, Palo Alto, CA 94301, Attention: Gregg A. Noel and Michael J. Mies.
13. SUCCESSORS.
This Agreement will inure to the benefit
of and be binding upon the parties hereto and their respective successors and the affiliates, officers, directors, employees, agents
and controlling persons referred to in Section 8 hereof, and no other person will have any right or obligation hereunder.
No party to this Agreement may assign, in whole or in part, this Agreement or any of its rights or obligations hereunder without
the prior written consent of the other parties hereto.
14. NO
FIDUCIARY DUTY.
The Company hereby acknowledges that (a) the
purchase and sale of the Securities pursuant to this Agreement is an arm’s-length commercial transaction between the Company,
on the one hand, and the Underwriters and any affiliate through which it may be acting, on the other, (b) the Underwriters
are acting as principal and not as an agent or fiduciary of the Company and (c) the Company’s engagement of the Underwriters
in connection with the Offering and the process leading up to the Offering is as independent contractors and not in any other capacity.
Furthermore, the Company agrees that it is solely responsible for making its own judgments in connection with the Offering (irrespective
of whether any of the Underwriters has advised or is currently advising the Company on related or other matters). The Company agrees
that it will not claim that the Underwriters have rendered advisory services of any nature or respect, or owe an agency, fiduciary
or similar duty to the Company, in connection with such transaction or the process leading thereto. The Company waives, to the
fullest extent permitted by law, any claims it may have against the Underwriters for breach of fiduciary duty or alleged breach
of fiduciary duty and agrees that the Underwriters shall have no liability (whether direct or indirect) to the Company in respect
of such a fiduciary duty claim or to any person asserting a fiduciary duty claim on behalf of or in right of the Company, including
stockholders, employees or creditors of the Company.
15. Recognition
of the U.S. Special Resolution Regimes.
(a) In
the event that any Underwriter that is a Covered Entity becomes subject to a proceeding under a U.S. Special Resolution Regime,
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.
(b) In
the event that any Underwriter that is a Covered Entity or a BHC Act Affiliate of such Underwriter becomes subject to a proceeding
under a U.S. Special Resolution Regime, Default Rights 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.
For purposes of this Section 15: (A) a
“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); (B) “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); (C) “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; and (D) “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.
16. 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.
17. APPLICABLE
LAW.
This Agreement will be governed by and construed
in accordance with the laws of the State of New York applicable to contracts made and to be performed within the State of New York,
without regard to the conflicts of laws principles that would apply to the laws of another jurisdiction. The Company and each Underwriter
hereby submits to the exclusive jurisdiction of the Federal and 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. The Company and
each Underwriter irrevocably and unconditionally waives any objection to the laying of venue of any suit or proceeding arising
out of or relating to this Agreement or the transactions contemplated hereby in Federal and state courts in the Borough of Manhattan
in The City of New York and irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any
such suit or proceeding in any such court has been brought in an inconvenient forum.
18. WAIVER
OF JURY TRIAL.
THE COMPANY HEREBY IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
19. COUNTERPARTS .
This Agreement may be signed in one or more
counterparts, each of which shall constitute an original and all of which together shall constitute one and the same agreement.
This Agreement may be executed by facsimile, PDF or other electronic means, which signatures will be accepted as if they were original
execution signatures.
20. HEADINGS.
The section headings used herein are for
convenience only and shall not affect the construction hereof.
21. MISCELLANEOUS.
UBS, an indirect, wholly owned subsidiary
of UBS AG, is not a bank and is separate from any affiliated bank, including any U.S. branch or agency of UBS AG. Because UBS is
a separately incorporated entity, it is solely responsible for its own contractual obligations and commitments, including obligations
with respect to sales and purchases of securities. Securities sold, offered or recommended by UBS are not deposits, are not insured
by the Federal Deposit Insurance Corporation, are not guaranteed by a branch or agency, and are not otherwise an obligation or
responsibility of a branch or agency.
22. DEFINITIONS.
The terms that follow, when used in this
Agreement, shall have the meanings indicated.
“Act” shall mean the Securities
Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder.
“Applicable
Time” shall mean [˜]
PM (New York time) on the date of this Agreement.
“Business Day” shall mean any
day other than a Saturday, a Sunday or a legal holiday or a day on which banking institutions or trust companies are authorized
or obligated by law to close in New York City.
“Commission” shall mean the
Securities and Exchange Commission.
“Effective Date” shall mean
each date and time that the Registration Statement, any post-effective amendment or amendments thereto and any Rule 462(b) Registration
Statement became or becomes effective.
“Exchange Act” shall mean the
Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder.
“Execution Time” shall mean
the date and time that this Agreement is executed and delivered by the parties hereto.
“Free Writing Prospectus” shall
mean a free writing prospectus, as defined in Rule 405.
“FINRA Questionnaires” shall
mean the written questionnaires sent on behalf of the Representatives to the officers, directors, and holders of 5% or more of
any class of the Company’s capital stock prior to the Closing Date.
“Liquidation” shall mean the
distributions of the Trust Account to the Public Stockholders in connection with the redemption of Common Stock held by the Public
Stockholders pursuant to the terms of the Amended and Restated Certificate of Incorporation and Bylaws if the Company fails to
consummate a Business Combination.
“Preliminary Prospectus” shall
mean any preliminary prospectus referred to in paragraph 1(a) above and any preliminary prospectus included in the Registration
Statement at the Effective Date that omits Rule 430A Information.
“Prospectus” shall mean the
prospectus relating to the Securities that is first filed pursuant to Rule 424(b) after the Execution Time.
“Registration Statement” shall
mean the registration statements referred to in paragraph 1(a) above, including exhibits and financial statements and any
prospectus and prospectus supplement relating to the Securities that is filed with the Commission pursuant to Rule 424(b) and
deemed part of such registration statement pursuant to Rule 430A, as amended at the Execution Time and, in the event any post-effective
amendment thereto or any Rule 462(b) Registration Statement becomes effective prior to the Closing Date, shall also mean
such registration statement as so amended or such Rule 462(b) Registration Statement, as the case may be.
“Rule 158”, “Rule 172”,
“Rule 405”, “Rule 419”, “Rule 424”, “Rule 430A”, “Rule 433”,
“Rule 462” and “Rule 501” refer to such rules under the Act.
“Rule 430A Information”
shall mean information with respect to the Securities and the offering thereof permitted to be omitted from the Registration Statement
when it becomes effective pursuant to Rule 430A.
“Rule 462(b) Registration
Statement” shall mean a registration statement and any amendments thereto filed pursuant to Rule 462(b) relating
to the offering covered by the registration statement referred to in Section 1(a) hereof.
“Statutory Prospectus” shall
mean (i) the Preliminary Prospectus dated contained in the Registration Statement at the time of its effectiveness, relating
to the Securities and (ii) the Time of Delivery Information, if any, set forth on Schedule II hereto.
23. Construction.
Unless the context otherwise requires:
(a) the
words “hereof,” “hereto,” “herein” and “hereunder” and words of similar import,
when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement;
(b) words
defined in the singular shall have a comparable meaning when used in the plural, and vice versa;
(c) wherever
the word “include,” “includes” or “including” is used in this Agreement, it shall be deemed
to be followed by the words “without limitation”;
(d) references
herein to any law shall be deemed to refer to such law as amended, reenacted, supplemented or superseded in whole or in part and
in effect from time to time and also to all rules and regulations promulgated thereunder;
(e) if
the last day for the giving of any notice or the performance of any act required or permitted under this Agreement is a day that
is not a Business Day, then the time for the giving of such notice or the performance of such action shall be extended to the next
succeeding Business Day;
(f) with
regard to each and every term and condition of this Agreement and all other agreements and instruments subject to the terms hereof,
the parties understand and agree that such documents have been mutually negotiated, prepared and drafted, and if at any time the
parties desire or are required to interpret or construe any such term or condition, no consideration will be given to the issue
of which party actually prepared, drafted or requested any such term or condition; and
(g) a
reference to “knowledge” of the Company or of which the Company is “aware” means to the actual knowledge
of any of the directors or executive officers of the Company, each after due and reasonable inquiry.
[remainder of page intentionally left
blank]
If the foregoing is in accordance with your
understanding of our agreement, please sign and return to us the enclosed duplicate hereof, whereupon it will become a binding
agreement among the Company and the several Underwriters in accordance with its terms.
| |
Very truly yours, |
| |
|
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KINS Technology Group Inc. |
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|
| |
By: |
|
| |
|
Name: |
|
| |
|
Title: |
|
| |
The foregoing Underwriting Agreement is hereby confirmed
and accepted as of the date first above written. |
| |
|
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UBS Securities LLC |
| |
|
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By: |
|
| |
|
Name: |
|
| |
|
Title: |
|
| |
|
| |
|
| |
By: |
|
| |
|
Name: |
|
| |
|
Title: |
|
| |
The foregoing Underwriting Agreement is hereby confirmed
and accepted as of the date first above written. |
| |
|
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Stifel, Nicolaus & Company, |
| |
Incorporated |
| |
|
| |
|
| |
By: |
|
| |
|
Name: |
|
| |
|
Title: |
|
| |
|
| |
|
| |
By: |
|
| |
|
Name: |
|
| |
|
Title: |
|
| |
The foregoing Underwriting Agreement is hereby confirmed
and accepted as of the date first above written. |
| |
|
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BTIG, LLC |
| |
|
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|
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By: |
|
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Name: |
|
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Title: |
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SCHEDULE I
| Underwriters |
|
Number of
Underwritten
Securities to be
Purchased |
| UBS Securities LLC |
|
[˜] |
| Stifel, Nicolaus & Company, Incorporated |
|
[˜] |
| BTIG, LLC |
|
[˜] |
| Maxim Group LLC |
|
[˜] |
| Academy Securities, Inc. |
|
[˜] |
| JMP Securities LLC |
|
[˜] |
| Total |
|
20,000,000 |
SCHEDULE II
TIME OF DELIVERY INFORMATION
KINS Technology Group Inc. priced 20,000,000
units at $10.00 per unit plus an additional 3,000,000 units if the underwriters exercise their over-allotment option in full.
The units will be issued pursuant to an
effective registration statement that has been previously filed with the Securities and Exchange Commission.
This communication shall not constitute
an offer to sell or the solicitation of any offer to buy, nor shall there be any sale of the securities in any state or jurisdiction
in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities law
of any such state or jurisdiction.
Copies of the prospectus related to
this offering may be obtained from UBS Securities LLC, Attention: Prospectus Department, 1285 Avenue of the Americas, New
York, NY 10019, by telephone at (888) 827-7275 or by email at ol-prospectusrequest@ubs.com or Stifel, Nicolaus & Company, Incorporated, Attn: Syndicate Department, One South Street, 15th Floor, Baltimore, Maryland 21202, email:
SyndProspectus@Stifel.com or [BTIG
contact].
SCHEDULE III
SCHEDULE OF WRITTEN TESTING-THE-WATERS COMMUNICATIONS
1. Investor presentation dated [ ] 2020.
Exhibit 4.4
KINS TECHNOLOGY GROUP INC.
and
CONTINENTAL STOCK TRANSFER & TRUST
COMPANY
WARRANT AGREEMENT
Dated as of [l],
2020
THIS WARRANT AGREEMENT (this “Agreement”),
dated as of [l], 2020, is by and between KINS Technology Group Inc., a Delaware corporation
(the “Company”), Continental Stock Transfer & Trust Company, a New York corporation, as warrant agent
(in such capacity, the “Warrant Agent”).
WHEREAS, the Company has entered into those certain Securities
Subscription Agreements with each of BlackRock Strategic Income Opportunities Portfolio of BlackRock Funds V, Master Total Return
Portfolio of Master Bond LLC, BlackRock Global Long/Short Credit Fund of BlackRock Funds IV and BlackRock Capital Allocation Trust
(each, a “BlackRock Entity” and collectively, the “BlackRock Entities”), pursuant to which
the BlackRock Entities, among other things, agreed to purchase an aggregate of 980,392 warrants in a private placement simultaneously
with the closing of the Offering (as defined below), bearing the legend set forth in Exhibit B hereto (the “BlackRock
Warrants”), at a purchase price of $1.00 per BlackRock Warrant;
WHEREAS, the
Company has entered into that certain Warrant Purchase Agreement with KINS Capital LLC, a Delaware limited liability company
(the “Sponsor”), pursuant to which the Sponsor agreed to purchase an aggregate of 7,019,607 warrants (or
7,919,607 warrants in the aggregate if the Over-allotment Option (as defined below) in connection with the Company’s
Offering is exercised in full) simultaneously with the closing of the Offering (and the closing of the Over-allotment Option,
if applicable) bearing the legend set forth in Exhibit B hereto (together with the BlackRock Warrants, the
“Sponsor Warrants”) at a purchase price of $1.00 per Sponsor Warrant;
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 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 the Company may require, of which up to $1,500,000 of such loans made to the Company may be convertible
into up to an additional 1,500,000 Sponsor Warrants at a price of $1.00 per Sponsor Warrant;
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 Common Stock (as defined below) and one-half of one Public Warrant (as defined below) (the “Units”)
and, in connection therewith, has determined to issue and deliver up to 11,500,000 redeemable warrants (including up to 1,500,000
redeemable warrants subject to the Over-allotment Option) to public investors in the Offering (the “Public Warrants”
and, together with the Sponsor Warrants, the “Warrants”). Each whole Warrant entitles the holder thereof to
purchase one share of Class A common stock of the Company, par value $0.0001 per share (“Common Stock”),
for $11.50 per whole 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. 333-249177 (the “Registration Statement”) and prospectus (the “Prospectus”), for
the registration, under the Securities Act of 1933, as amended (the “Securities Act”), of the Units, the Public
Warrants and the shares of Common Stock included in the 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. |
| 2.1 | 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, either by manual or facsimile signature, pursuant to this Agreement, a certificated Warrant shall be invalid
and of no effect and may not be exercised by the holder thereof. |
| 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 Chairman of the Board, the Chief Executive Officer, the President, the Chief
Financial Officer, 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 shares of Common Stock and Public Warrants comprising
the 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 UBS Securities LLC, Stifel, Nicolaus &
Company, Incorporated and BTIG, LLC, but in no event shall the shares of Common Stock and the Public Warrants comprising
the 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 then received by the Company from the exercise by the underwriters of their right to purchase additional 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 | Fractional Warrants. The Company shall not issue fractional Warrants other than as part
of the Units. If, upon the detachment of Public 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 | Sponsor Warrants. The Sponsor Warrants shall be identical to the Public Warrants,
except that so long as they are held by the Sponsor, a BlackRock Entity or any of its Permitted Transferees (as defined
below) the Sponsor Warrants: (i) may be exercised for cash or on a cashless basis, pursuant to subsection
3.3.1(c) hereof, (ii) including the shares of Common Stock issuable upon exercise of the Sponsor Warrants, may
not be transferred, assigned or sold until thirty (30) days after the completion by the Company of an initial Business
Combination, and (iii) shall not be redeemable by the Company pursuant to Section 6.1; provided, however,
that in the case of (ii), the Sponsor Warrants and any shares of Common Stock issued upon exercise of the Sponsor 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 members of the Sponsor, or any affiliates of the Sponsor or any employee or partner of any such affiliate; |
| (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 Delaware or the Sponsor’s limited liability company agreement, as
amended, upon dissolution of the Sponsor; |
| (h) | in the event of the Company’s completion of a liquidation, merger, stock exchange 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 completion of the initial Business Combination; or |
| (i) | in the case of the BlackRock Entities, to such investors’
affiliates, or any investment fund or other entity controlled or managed by such investors, or to any investment manager or investment
advisor of the BlackRock Entities or an affiliate of any such investment manager or investment advisor; |
provided, however, that in the
case of clauses (a) through (e) these permitted transferees (the “Permitted Transferees”) must enter
into a written agreement agreeing to be bound by these transfer restrictions and the other restrictions contained 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 whole 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)
described in the prior sentence 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 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 the earlier to occur of:
(w) 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, (x) the liquidation of the Company in accordance with the Company’s amended and
restated certificate of incorporation, as amended from time to time, if the Company fails to consummate a Business
Combination, and (y) other than with respect to the Sponsor Warrants then held by the Sponsor, a BlackRock Entity or
their Permitted Transferees with respect to a redemption pursuant to Section 6.2 hereof, 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 Sponsor Warrant
then held by the Sponsor, a BlackRock Entity or
their Permitted Transferees in connection with a redemption pursuant to Section 6.2 hereof) in
the event of a redemption (as set forth in Section 6 hereof), each Warrant (other than a Sponsor Warrant then
held by the Sponsor, a BlackRock Entity or
their Permitted Transferees in the event of a redemption pursuant to Section 6.2 hereof) 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. |
| 3.3.1 | 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 shares 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 good bank draft payable to the
order of 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 6.1
and Section 6.4, the “Fair Market Value” shall mean the volume-weighted average price of the Common
Stock as reported during the ten (10) trading days immediately following 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 Sponsor Warrant, so long as such Sponsor Warrant is held by the Sponsor,
a BlackRock Entity or a Permitted Transferee, by surrendering the Warrants for that number of shares of Common Stock equal to
(i) if in connection with a redemption of Sponsor 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, 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(c)) over the
Warrant Price, by (y) the Fair Market Value. Solely for purposes of this subsection 3.3.1(c), the “Fair
Market Value” shall mean the volume-weighted average price of the Common Stock as reported during the ten
(10) trading days immediately following the date on which notice of exercise of the Warrant is sent to the Warrant
Agent; |
| (d) | as provided in Section 6.2 with respect to a Make-Whole Exercise; or |
| (e) | as provided in Section 7.4 hereof. |
The Warrant Agent shall forward
funds received for warrant exercises in a given month by the 5th (5th) Business Day of the following month by wire transfer
to an account designated by the Company.
| 3.3.2 | Issuance of Shares of Common Stock on 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. 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 shares of Common Stock issuable upon such Warrant exercise have 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. Subject to Section 4.6 of this Agreement, a Registered Holder of Public Warrants may exercise its Public
Warrants only for a whole number of shares of Common Stock. In no event will the Company be required to net cash settle the Warrant
exercise. 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
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, 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), to the Warrant Agent’s actual knowledge, would beneficially own in excess
of 9.8% or such other amount as the 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 its affiliates 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 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 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 Company’s 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 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. |
| 4.1.1 | 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 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 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 shares of Common Stock entitling holders to
purchase shares of Common Stock at a price less than the “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 shares of Common Stock) multiplied by (ii) one (1) minus the quotient of (x) the price per share
of Common Stock paid in such rights offering divided by (y) the Fair Market Value. For purposes of this subsection 4.1.1,
(i) if the rights offering is for securities convertible into or exercisable for shares of Common Stock, in determining the
price payable for shares of 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) “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. |
| 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 the holders of the shares of
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 shares of Common Stock in connection with a proposed initial
Business Combination, (d) to satisfy the redemption rights of the holders of the shares of Common Stock in connection with
a stockholder vote to amend the Company’s amended and restated certificate of incorporation (i) 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 Company’s public shares of Common Stock if the Company does not complete its initial Business Combination within
the time period set forth therein or (ii) with respect to any other provision relating to the Company’s stockholders’
rights or pre-initial Business Combination activity, or (e) in connection with the redemption of public shares 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 shares of Common Stock during the 365-day period ending on the date of declaration
of such dividend or distribution to the extent it does not exceed $0.50 (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). |
| 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, 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 debt or equity securities that are convertible, exercisable or exchangeable for shares of
Common Stock, in each case 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 (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 B common stock, par value $0.0001 per share, of the Company held by the Founders
or such 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 the Company’s initial Business Combination on the date of the completion of the Company’s initial Business
Combination (net of redemptions), and (z) the volume-weighted average trading price of Common Stock during the twenty (20)
trading day period starting on the trading day prior to the day on which the Company consummates its initial Business Combination
(such price, the “Market Value”) is below $9.20 per share, 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
price 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, and the $10.00 per share redemption trigger price described in Section 6.2 will
be adjusted (to the nearest cent) to be equal to 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 corporation (other than a merger or consolidation 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 shares of 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 merger or consolidation,
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 shares
of Common Stock in such merger or consolidation 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 shares of 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 shares of 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 shares of 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) 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) (but in no event less than zero) 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 shares of 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 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 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. |
| 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, 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 reasonably acceptable to the Warrant Agent, duly executed by the registered holder
thereof, or by a duly authorized attorney, 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 in 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 Sponsor Warrants), the Warrant Agent shall not cancel such Warrant and issue new Warrants
in exchange thereof 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. |
| 6.1 | Redemption of Warrants when the price per share of Common Stock equals or exceeds $18.00.
Subject to Section 6.5 hereof, not less than all of the outstanding Warrants may be redeemed, at the option of the
Company, at any time while they are exercisable and prior to their expiration, at the office(s) of the Warrant Agent, upon
notice to the Registered Holders of the Warrants, as described in Section 6.3 below, at the price (the “Redemption
Price”) of $0.01 per Warrant, provided that (i) the last sales price of the Common Stock reported has been at least
$18.00 per share (subject to adjustment in compliance with Section 4 hereof), on each of 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 and (ii) there is an effective registration statement covering 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 Section 6.5
hereof, not less than all of the outstanding Warrants may be redeemed, at the option of the Company, commencing ninety (90) days
after they are first exercisable and prior to their expiration, 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
(i) the last reported sales price of the Common Stock reported has been at least $10.00 per share (subject to adjustment in
compliance with Section 4 hereof), on the trading day prior to the date on which notice of the redemption is given, (ii) the
Sponsor Warrants are also concurrently called for redemption on the same terms as the outstanding Public Warrants and (iii) there
is an effective registration statement covering the shares of Common Stock issuable upon exercise of the Warrants, and a current
prospectus relating thereto, available throughout the 30-day Redemption Period (as defined in Section 6.3 below). During
the Redemption Period in connection with a redemption pursuant to this Section 6.2, Registered Holders of the Warrants
may elect to exercise their Warrants on a “cashless basis” pursuant to subsection 3.3.1 and receive a number
of shares of Common Stock determined by reference to the table below, based on the Redemption Date (calculated for purposes of
the table as the period to expiration of the Warrants) and the “Fair Market Value” (as such term is defined in subsection
3.3.1(b)) (a “Make-Whole Exercise”). |
| | |
Fair Market Value of shares of Common Stock ($) | |
Redemption Date (period to expiration of the
Warrants) | |
≤10 | | |
11 | | |
12 | | |
13 | | |
14 | | |
15 | | |
16 | | |
17 | | |
≥18 | |
| 59 months | |
| 0.236 | | |
| 0.257 | | |
| 0.277 | | |
| 0.295 | | |
| 0.311 | | |
| 0.325 | | |
| 0.338 | | |
| 0.350 | | |
| 0.361 | |
| 57 months | |
| 0.233 | | |
| 0.255 | | |
| 0.275 | | |
| 0.293 | | |
| 0.309 | | |
| 0.324 | | |
| 0.338 | | |
| 0.350 | | |
| 0.361 | |
| 54 months | |
| 0.229 | | |
| 0.251 | | |
| 0.272 | | |
| 0.291 | | |
| 0.307 | | |
| 0.323 | | |
| 0.337 | | |
| 0.350 | | |
| 0.361 | |
| 51 months | |
| 0.225 | | |
| 0.248 | | |
| 0.269 | | |
| 0.288 | | |
| 0.305 | | |
| 0.321 | | |
| 0.336 | | |
| 0.349 | | |
| 0.361 | |
| 48 months | |
| 0.220 | | |
| 0.243 | | |
| 0.265 | | |
| 0.285 | | |
| 0.303 | | |
| 0.320 | | |
| 0.335 | | |
| 0.349 | | |
| 0.361 | |
| 45 months | |
| 0.214 | | |
| 0.239 | | |
| 0.261 | | |
| 0.282 | | |
| 0.301 | | |
| 0.318 | | |
| 0.334 | | |
| 0.348 | | |
| 0.361 | |
| 42 months | |
| 0.208 | | |
| 0.234 | | |
| 0.257 | | |
| 0.278 | | |
| 0.298 | | |
| 0.316 | | |
| 0.333 | | |
| 0.348 | | |
| 0.361 | |
| 39 months | |
| 0.202 | | |
| 0.228 | | |
| 0.252 | | |
| 0.275 | | |
| 0.295 | | |
| 0.314 | | |
| 0.331 | | |
| 0.347 | | |
| 0.361 | |
| 36 months | |
| 0.195 | | |
| 0.222 | | |
| 0.247 | | |
| 0.271 | | |
| 0.292 | | |
| 0.312 | | |
| 0.330 | | |
| 0.346 | | |
| 0.361 | |
| 33 months | |
| 0.187 | | |
| 0.215 | | |
| 0.241 | | |
| 0.266 | | |
| 0.288 | | |
| 0.309 | | |
| 0.328 | | |
| 0.345 | | |
| 0.361 | |
| 30 months | |
| 0.179 | | |
| 0.208 | | |
| 0.235 | | |
| 0.261 | | |
| 0.284 | | |
| 0.306 | | |
| 0.326 | | |
| 0.345 | | |
| 0.361 | |
| 27 months | |
| 0.170 | | |
| 0.199 | | |
| 0.228 | | |
| 0.255 | | |
| 0.280 | | |
| 0.303 | | |
| 0.324 | | |
| 0.343 | | |
| 0.361 | |
| 24 months | |
| 0.159 | | |
| 0.190 | | |
| 0.220 | | |
| 0.248 | | |
| 0.274 | | |
| 0.299 | | |
| 0.322 | | |
| 0.342 | | |
| 0.361 | |
| 21 months | |
| 0.148 | | |
| 0.179 | | |
| 0.210 | | |
| 0.240 | | |
| 0.268 | | |
| 0.295 | | |
| 0.319 | | |
| 0.341 | | |
| 0.361 | |
| 18 months | |
| 0.135 | | |
| 0.167 | | |
| 0.200 | | |
| 0.231 | | |
| 0.261 | | |
| 0.289 | | |
| 0.315 | | |
| 0.339 | | |
| 0.361 | |
| 15 months | |
| 0.120 | | |
| 0.153 | | |
| 0.187 | | |
| 0.220 | | |
| 0.253 | | |
| 0.283 | | |
| 0.311 | | |
| 0.337 | | |
| 0.361 | |
| 12 months | |
| 0.103 | | |
| 0.137 | | |
| 0.172 | | |
| 0.207 | | |
| 0.242 | | |
| 0.275 | | |
| 0.306 | | |
| 0.335 | | |
| 0.361 | |
| 9 months | |
| 0.083 | | |
| 0.117 | | |
| 0.153 | | |
| 0.191 | | |
| 0.229 | | |
| 0.266 | | |
| 0.300 | | |
| 0.332 | | |
| 0.361 | |
| 6 months | |
| 0.059 | | |
| 0.092 | | |
| 0.130 | | |
| 0.171 | | |
| 0.213 | | |
| 0.254 | | |
| 0.292 | | |
| 0.328 | | |
| 0.361 | |
| 3 months | |
| 0.030 | | |
| 0.060 | | |
| 0.100 | | |
| 0.145 | | |
| 0.193 | | |
| 0.240 | | |
| 0.284 | | |
| 0.324 | | |
| 0.361 | |
| 0 months | |
| 0.000 | | |
| 0.000 | | |
| 0.042 | | |
| 0.115 | | |
| 0.179 | | |
| 0.233 | | |
| 0.281 | | |
| 0.324 | | |
| 0.361 | |
The exact Fair Market Value and Redemption Date (as
defined below) 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. 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. In the event that the Company elects to redeem
all of 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 (such 30-day period, the “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. |
| 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 Sponsor Warrants. The Company agrees that the redemption rights provided in
Section 6.1 shall not apply to the Sponsor Warrants if at the time of the redemption such Sponsor Warrants continue
to be held by the initial holder thereof or its Permitted Transferees. However, once such Sponsor Warrants are transferred (other
than to Permitted Transferees under subsection 2.6), the Company may redeem the Sponsor Warrants, provided that the criteria
for redemption are met, including the opportunity of the holder of such Sponsor Warrants to exercise the Sponsor Warrants prior
to redemption pursuant to Section 6.4. Sponsor Warrants that are transferred to persons other than Permitted Transferees
shall upon such transfer cease to be Sponsor Warrants and shall become Public Warrants under this Agreement. |
| 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 stockholders 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 Shares 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 Shares of Common Stock; Cashless Exercise at Company’s Option. |
| 7.4.1 | Registration of Shares of Common Stock. The Company agrees that as soon as practicable,
but in no event later than twenty (20) Business Days after the closing of its initial Business Combination, it shall use its
commercially reasonable 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 its commercially reasonable 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 60th Business Day following the closing of the Business Combination,
holders of the Warrants shall have the right, during the period beginning on the 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 issuance of the shares of Common
Stock issuable upon exercise of the Warrants, to exercise such Warrants on a “cashless basis,” by exchanging the Warrants
(in accordance with Section 3(a)(9) of the Securities Act (or any successor statute) 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 shares of Common Stock per Warrant. 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 third trading day prior to the date that
notice of exercise is received by the Warrant Agent from the holder of such Warrants 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 rule)) 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 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 shares of Common Stock issuable upon exercise of the Warrants, notwithstanding
anything in this Agreement to the contrary, and (y) use its commercially reasonable efforts to register or qualify for sale
the shares of Common Stock issuable upon exercise of the Public Warrant under applicable blue sky laws 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 and the Warrant Agent 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 Company’s transfer agent for the shares of
Common Stock not later than the effective date of any such appointment. |
| 8.2.3 | Merger or Consolidation of Warrant Agent. Any entity into which the Warrant Agent may be
merged or with which it may be consolidated or any entity 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 Chairman of the Board, the Chief
Executive Officer, the President, the Chief Financial Officer or the Secretary 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 or bad faith. The Company agrees to indemnify the Warrant Agent and save it harmless against any and all liabilities,
including judgments, costs and reasonable 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 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 Continental Stock Transfer & Trust
Company, 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 delivered if by hand
or overnight delivery or if sent by trackable mail or private courier service when sent, addressed (until another address is filed
in writing by the Company with the Warrant Agent), as follows: |
KINS Technology Group Inc.
Four Palo Alto Square, Suite 200
3000 El Camino Real
Palo Alto, CA 94306
Attention: Chief Financial Officer
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 delivered if by hand or overnight delivery or if sent by trackable mail or private courier service when sent, addressed (until
another address is filed in writing by the Warrant Agent with the Company), as follows:
Continental Stock Transfer & Trust Company
One State Street, 30th Floor
New York, NY 10004
Attention: Compliance Department
| 9.3 | Applicable Law and Exclusive Forum. The validity, interpretation, and performance of this
Agreement and of the Warrants shall be governed by and construed in accordance with the laws of the State of New York, including,
without limitation, Sections 5-1401 and 5-1402 of the New York General Obligations Law and New York Civil Practice Laws and Rule 327(b).
The Company hereby agrees that any action, proceeding or claim against it arising out of, or otherwise based on, 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 the exclusive forum for any such action,
proceeding or claim. The Company hereby waives any objection to such exclusive jurisdiction and that such courts represent an inconvenient
forum. |
Notwithstanding the foregoing
the provisions of this paragraph 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 the Warrants shall be deemed to have notice of and to have consented
to the forum provisions in this Section 9.3. If any action, the subject matter of which is within the scope the forum provisions
above, is filed in a court other than a court located within the State of New York or the United States District Court for the
Southern District of New York (a “foreign action”) in the name of any warrant holder, such warrant holder shall be
deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located within the State of New
York or the United States District Court for the Southern District of New York in connection with any action brought in any such
court to enforce the forum provisions (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.
| 9.4 | Persons Having Rights under this Agreement. Nothing in this Agreement shall be construed
to confer upon, or give to, any person, corporation or other entity 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. All covenants, conditions, stipulations, promises, and agreements contained in this Agreement shall be for
the sole and exclusive benefit of the parties hereto 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 it. |
| 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 for the purpose of (i) 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 defective provision contained
herein or (ii) adding or changing any 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 rights of the Registered Holders
under this Agreement. All other modifications or amendments, including any modification or amendment to increase the Warrant Price
or shorten the Exercise Period, shall require the vote or written consent
of the Registered Holders of 50% of the then-outstanding Public Warrants and, solely with respect to any amendment to the terms
of the Sponsor Warrants or any provision of this Agreement with respect to the Sponsor Warrants, 50% of the then-outstanding Sponsor
Warrants. 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. |
Exhibit A Form of Warrant Certificate
Exhibit B Legend — Sponsors
Warrants and BlackRock Warrants
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed as of the date first above written.
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KINS TECHNOLOGY GROUP INC. |
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By: |
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Name: |
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Title: |
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CONTINENTAL STOCK TRANSFER &
TRUST COMPANY, AS WARRANT AGENT |
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By: |
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Name: |
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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
KINS Technology Group Inc.
Incorporated Under the Laws of the State of Delaware
CUSIP 49714K 117
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 KINS Technology Group 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.
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KINS TECHNOLOGY GROUP INC. |
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By: |
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Name: |
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Title: |
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CONTINENTAL STOCK TRANSFER & TRUST COMPANY, AS WARRANT AGENT |
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By: |
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Name: |
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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 [•], 2020 (the “Warrant
Agreement”), duly executed and delivered by the Company to Continental Stock Transfer & Trust Company, a New
York corporation, 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 KINS Technology Group 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 Sponsor
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) |
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(Tax Identification Number) |
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 BY THIS CERTIFICATE
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 KINS TECHNOLOGY GROUP INC. (THE “COMPANY”),
KINS Capital LLC AND THE OTHER PARTIES THERETO, OR THE SECURITIES SUBSCRIPTION AGREEMENTS BY AND BETWEEN THE COMPANY AND THE BLACKROCK ENTITIES (AS DEFINED IN THE RECITALS OF THE WARRANT
AGREEMENT REFERRED TO HEREIN), AS APPLICABLE, THE SECURITIES REPRESENTED BY THIS
CERTIFICATE 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 THE RECITALS 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 BY THIS CERTIFICATE
AND SHARES OF COMMON STOCK OF THE COMPANY ISSUED UPON EXERCISE OF SUCH SECURITIES SHALL BE ENTITLED TO REGISTRATION RIGHTS UNDER
A REGISTRATION RIGHTS AGREEMENT TO BE EXECUTED BY THE COMPANY.
Exhibit 10.1
[l],
2020
KINS Technology Group Inc.
Four Palo Alto Square, Suite 200
3000 El Camino Real
Palo Alto, CA 94306
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”) entered into or proposed to be entered into by and among KINS Technology
Group Inc., a Delaware corporation (the “Company”), and UBS Securities LLC, Stifel,
Nicolaus & Company, Incorporated and BTIG, LLC, as 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 23,000,000 of the Company’s units (including up to 3,000,000 units that may be purchased
to cover over-allotments, 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-half 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 shall 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 11 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, KINS Capital LLC, a Delaware limited liability company (the “Sponsor”),
and the other undersigned persons (each such other undersigned persons, an “Insider” and collectively,
the “Insiders”), each hereby agrees, severally but not jointly, with the Company as follows:
1. The
Sponsor and each Insider agrees 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.
2. The
Sponsor and each Insider hereby agrees that in the event that the Company fails to consummate a Business Combination within 18
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 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 ten (10) business days thereafter, subject to lawfully available funds therefor, redeem 100% of
the Class A Common Shares 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 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 other requirements of applicable law. The Sponsor and each Insider agrees 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 18 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 and each Insider acknowledges 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 held by it. The Sponsor and each Insider hereby
further waives, 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
Class A Common Shares 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 18 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 18 months from the date of the closing of the Public Offering).
3. Notwithstanding
the provisions set forth in paragraphs 7(a) and (b) below, during the period commencing on the effective date of
the Underwriting Agreement and ending 180 days after such date, the Sponsor and each Insider shall not, without the prior
written consent of UBS Securities LLC, Stifel, Nicolaus & Company, Incorporated and BTIG, LLC, (i) offer, sell,
contract to sell, pledge or grant any option to purchase or otherwise dispose of (or enter into any transaction that is
designed to, or might reasonably be expected to, result in the disposition (whether by actual disposition or effective
economic disposition due to cash settlement or otherwise)), directly or indirectly, or establish or increase a put equivalent
position or liquidate or decrease 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
Units, Class A Common Shares, Warrants or any securities convertible into, or exercisable, or exchangeable for,
Class A Common Shares, (ii) 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, Class A Common Shares, Warrants or any securities
convertible into, or exercisable, or exchangeable for, Class A Common Shares owned by it, him or her, whether any such
transaction is to be settled by delivery of such securities, in cash or otherwise, or (iii) or publicly announce an
intention to effect any such transaction; 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, 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) $10.10 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 of 1933, as amended. 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. To
the extent that the Underwriters do not exercise their option to purchase up to an additional 3,000,000 Units within 45 days from
the date of the Prospectus (and as further described in the Prospectus), the Sponsor agrees that it shall forfeit, at no cost,
a number of Founder Shares in the aggregate equal to 750,000 multiplied by a fraction, (i) the numerator of which is 3,000,000
minus the number of Units purchased by the Underwriters upon the exercise of their over-allotment option, and (ii) the denominator
of which is 3,000,000. 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 over-allotment option 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. 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. In connection with such increase or decrease in the size of the Public Offering, then (A) the references
to 3,000,000 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 Class A Common Shares included in the Units issued in the Public Offering and (B) the
reference to 750,000 in the formula set forth in the immediately preceding sentence shall be adjusted to such number of Founder
Shares that the Sponsor would have to return to the Company in order for the number of Founder Shares to equal an aggregate of
20.0% of the Company’s issued and outstanding Shares after the Public Offering.
6. The
Sponsor and each Insider hereby agrees and acknowledges that: (i) the Underwriters and the Company would be irreparably injured
in the event of a breach by such Sponsor 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 and each Insider agrees that it, he or she shall not Transfer (as defined below) any Founder Shares (or Class A Common
Shares 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) 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 Class A Common Shares for cash, securities or other property or (y) 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 (the “Founder Shares Lock-up Period”).
(b) The
Sponsor and each Insider agrees that it, he or she shall not Transfer any Private Placement Warrants (or Class A Common Shares
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 Warrants 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 Warrants and Class A
Common Shares issued or issuable upon the exercise or conversion of the Private Placement Warrants or the Founder Shares and that
are held by the Sponsor 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 Sponsor, or any affiliates of the Sponsor or any employee or partner of any such affiliate,
(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 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 Shares 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. The
Sponsor 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 and each Insider’s questionnaire furnished to the Company, if any, is true and accurate in all respects.
The Sponsor 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. Except
as disclosed in, or as expressly contemplated by, the Prospectus, neither the Sponsor nor any Insider nor any affiliate of the
Sponsor or any Insider, nor any director or officer of the Company, 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).
10. The
Sponsor and each Insider has full right and power, without violating any agreement to which it 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.
11. 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 Shares and the
Founder Shares; (iii) “Class A Common Shares” shall mean shares of Class A Common
Stock; (iv) “Founder Shares” shall mean the 5,750,000 shares of Class B common stock, par
value $0.0001 per share, issued and outstanding immediately prior to the consummation of the Public Offering;
(v) “Initial Stockholders” shall mean the Sponsor and any Insider that holds Founder Shares;
(vi) “Private Placement Warrants” shall mean the Warrants to purchase up to 7,019,607
Class A Common Shares of the Company (or 7,919,607 Class A Common Shares if the over-allotment option is
exercised in full) that the Sponsor has agreed to purchase for an aggregate purchase price of $7,019,607 in the aggregate (or
$7,919,607 if the over-allotment option is exercised in full), or $1.00 per Warrant, in a private placement that shall occur
simultaneously 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) herein.
12. 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 that is the subject of any such change, amendment modification or waiver
and (2) the Sponsor.
13. 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 and each Insider and their respective successors, heirs and assigns and permitted transferees.
14. 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.
15. 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.
16. 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.
17. 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.
18. 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.
19. 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 (including, for the avoidance of doubt, any Insider with respect to any other Insider), and no party shall
be liable or responsible for the obligations of another party, including, without limitation, indemnification obligations and notice
obligations.
20. 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 December 31, 2020; provided further that paragraph 4 of this Letter Agreement
shall survive such liquidation.
[Signature page follows]
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KINS Capital
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Acknowledged and Agreed:
KINS Technology Group
Inc.
Exhibit 10.2
INVESTMENT
MANAGEMENT TRUST AGREEMENT
This Investment Management
Trust Agreement (this “Agreement”) is made effective as of [l],
2020, by and between KINS Technology Group Inc., a Delaware corporation (the “Company”), and Continental
Stock Transfer & Trust Company, a New York corporation (the “Trustee”).
WHEREAS, the
Company’s registration statement on Form S-1, File No. 333-249177 (the “Registration Statement”)
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 (“Common Stock”),
and one-half 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 by the U.S. Securities and Exchange Commission; and
WHEREAS,
the Company has entered into an Underwriting Agreement (the “Underwriting Agreement”) with UBS
Securities LLC, Stifel, Nicolaus & Company, Incorporated and BTIG, LLC, as representatives
(the “Representatives”) of the several underwriters (the “Underwriters”)
named therein; and
WHEREAS, as
described in the Registration Statement, $202,000,000 of the gross proceeds of the Offering and sale of the Private Placement
Warrants (as defined in the Underwriting Agreement) (or $232,300,000 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 shares of 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”); and
WHEREAS,
pursuant to the Underwriting Agreement, a portion of the Property equal to up to $7,000,000, or up to $8,050,000 if the
Underwriters’ over-allotment option is exercised in full, is attributable to deferred underwriting discounts and
commissions that may be payable by the Company to the Underwriters upon the consummation of the Business Combination (as
defined below) (the “Deferred Discount”); 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 located 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) 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 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; it being understood that the Trust Account will earn no interest while account
funds are uninvested awaiting the Company’s instructions hereunder; while on deposit, the Trustee may earn bank credits or
other consideration;
(d) Collect
and receive, when due, all 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 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 following (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 its Chief Executive
Officer, Chief Financial Officer, Secretary or other authorized officer of the Company (an “Authorized Representative”),
and complete the liquidation of the Trust Account and distribute the Property in the Trust Account, including interest (which interest
shall be net of any 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 other documents referred to therein, or (y) upon the date which is the later
of (1) 18 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 Company’s amended and restated certificate of incorporation, as amended from time to
time, 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 any 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;
(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 (a “Tax Payment Withdrawal Instruction”), withdraw from the Trust Account and
distribute on behalf of the Company the amount of interest earned on the Property requested by the Company to cover any tax obligation
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; 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 initially
deposited in the Trust Account; provided, further, however, 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 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 (a “Stockholder Redemption Withdrawal Instruction”), the Trustee shall distribute
to or on behalf of the Company the amount requested by the Company to be used to redeem shares of Common Stock from Public Stockholders
properly submitted 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 allow redemptions in connection
with its initial Business Combination or to redeem 100% of the Company’s public shares of Common Stock if the Company does
not complete its initial Business Combination within the time period set forth therein or (B) with respect to any other provision
relating to the Company’s 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 Section 1(i), (j) or (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 an Authorized Representative of the Company. 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 reasonable and documented
out-of-pocket expenses, including reasonable outside 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 and until it is distributed to the Company pursuant to Sections
1(i) through 1(j) hereof. The Company shall pay the Trustee the initial acceptance fee and the first annual
administration fee at the consummation of the Offering. The Company shall not be responsible for any other fees or charges of the
Trustee except as set forth in this Section 2(c) and as may be provided in Section 2(b) hereof;
(d) In
connection with any vote of the Company’s stockholders regarding any merger, capital stock exchange, asset acquisition, stock
purchase, reorganization or other similar business combination involving the Company and one or more businesses (a “Business
Combination”), provide to the Trustee an affidavit or certificate of the inspector of elections for the stockholder
meeting 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) 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 Deferred Discount be paid directly to the account or accounts directed by UBS Securities
LLC, Stifel, Nicolaus & Company, Incorporated and BTIG, LLC;
(g) 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.
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 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 written direction, order, notice, demand, certificate,
opinion or advice of counsel (including counsel chosen by the Trustee with written notification to the Company, 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 and has agreed to become subject to the
terms of this Agreement (whether following the Trustee giving notice that it desires to resign under this Agreement or the Company
otherwise electing to replace the Trustee under 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 and distributed the Property in accordance with the provisions of the Termination Letter,
this Agreement shall terminate except with respect to Section 2(b); 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 or KINS Capital 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 herein 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 out-of-pocket 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.
(c) This
Agreement contains the entire agreement and understanding of the parties hereto with respect to the subject matter hereof. Except
for Section 1(i), 1(j) or 1(k) (which sections may not be modified, amended or deleted without
the affirmative vote of sixty-five percent (65%) of the then outstanding shares of Common Stock and Class B common stock,
par value $0.0001 per share, of the Company voting together as a single class; provided that no such amendment will affect any
Public Stockholder who has otherwise validly 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), 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) 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.
(e) 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, New York 10004
Attn: Francis Wolf & Celeste Gonzalez
Email: fwolf@continentalstock.com;
cgonzalez@continentalstock.com
if to the Company,
to:
KINS Technology Group Inc.
Four Palo Alto Square, Suite 200
3000 El Camino Real
Palo Alto, CA 94306
Email: [l]
in each case, with
copies to:
KINS Capital LLC
Four Palo Alto Square, Suite 200
3000 El Camino Real
Palo Alto, CA 94306
and
Skadden, Arps, Slate, Meagher &
Flom LLP
525 University Ave, Suite 1400
Palo Alto, California 94301
Attn: Michael Mies
(f) This
Agreement may not be assigned by the Trustee without the prior consent of the Company.
(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 each
a third party beneficiary 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.
| |
KINS Technology Group Inc. |
| |
TRUSTEE: |
| |
|
| |
Continental Stock Transfer & Trust Company, |
| |
as Trustee |
SCHEDULE
A
| Fee Item | |
Time and method of payment | |
Amount | |
| Initial acceptance fee | |
Initial closing of the Offering by wire transfer. | |
$ | 3,500.00 | |
| Annual fee | |
First year fee payable at initial closing of the 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) and 1(j) | |
Billed to Company following disbursement made to Company under Sections 1(i) and 1(j) | |
$ | 250.00 | |
| Paying Agent services as required pursuant to Section 1(i) and 1(k) | |
Billed to Company upon delivery of service pursuant to Section 1(i) and 1(k) | |
| Prevailing rates | |
EXHIBIT A
[Letterhead of Company]
[Insert date]
Continental Stock Transfer & Trust Company
One State Street, 30th Floor
New York, New York 10004
Attn: Francis Wolf & 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 KINS Technology Group Inc. (the “Company”) and Continental
Stock Transfer & Trust Company (the “Trustee”), dated as of [l],
2020 (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 Target Business
(the “Business Combination”) on or about [insert date]. The Company shall notify you at least seventy-two
(72) hours in advance of the actual date (or such shorter time period as you may agree) 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 into the above-referenced trust operating account at J.P. Morgan Chase Bank, N.A. 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 UBS Securities LLC, Stifel, Nicolaus & Company, Incorporated and BTIG, LLC (the
“Representatives”) (with respect to the Deferred Discount) and the Company shall direct on the
Consummation Date. 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 by the Chief Executive
Officer or Chief Financial Officer of the Company, which verifies that the Business Combination has been approved by a vote of
the Company’s stockholders, if a vote is held, and (b) 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 Deferred Discount 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 the notice as soon thereafter as possible.
| |
Very truly yours, |
| |
|
| |
KINS Technology Group Inc. |
| cc: | UBS Securities LLC |
| | Stifel, Nicolaus & Company, Incorporated |
| | BTIG, LLC |
EXHIBIT B
[Letterhead of Company]
[Insert date]
Continental Stock Transfer & Trust Company
One State Street, 30th Floor
New York, New York 10004
Attn: Francis Wolf & 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 KINS Technology Group Inc. (the “Company”) and Continental
Stock Transfer & Trust Company (the “Trustee”), dated as of [l],
2020 (the “Trust Agreement”), this is to advise you that the Company has been unable to effect a business
combination with a Target Business (the “Business Combination”) within the time frame specified in the
Company’s amended and restated certificate of incorporation, as described in the Company’s Registration Statement 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 to transfer the
total proceeds into the trust operating account at J.P. Morgan Chase Bank, N.A. to
await distribution to the Public Stockholders. The Company has selected _______________ 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 amended and restated certificate of incorporation
of the Company. Upon the distribution of all the funds, your obligations under the Trust Agreement shall be terminated, except
to the extent otherwise provided in Section 1(j) of the Trust Agreement.
| |
Very truly yours, |
| |
|
| |
KINS Technology Group Inc. |
| cc: | UBS Securities LLC |
| | Stifel, Nicolaus & Company, Incorporated |
| | BTIG, LLC |
EXHIBIT C
[Letterhead of Company]
[Insert date]
Continental Stock Transfer & Trust Company
One State Street, 30th Floor
New York, New York 10004
Attn: Francis Wolf & Celeste Gonzalez
Re: Trust
Account – Tax Payment Withdrawal Instruction
Dear Mr. Wolf and Ms. Gonzalez:
Pursuant to Section 1(j) of
the Investment Management Trust Agreement between KINS Technology Group Inc. (the “Company”) and Continental
Stock Transfer & Trust Company (the “Trustee”), dated as of [l],
2020 (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, |
| |
|
| |
KINS Technology Group Inc. |
| cc: | UBS Securities LLC |
| Stifel, Nicolaus & Company, Incorporated |
| | BTIG, LLC |
| | |
EXHIBIT D
[Letterhead of Company]
[Insert date]
Continental Stock Transfer & Trust Company
One State Street, 30th Floor
New York, New York 10004
Attn: Francis Wolf & 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 GS Acquisition Holdings Corp (the “Company”) and Continental
Stock Transfer & Trust Company (the “Trustee”), dated as of [l],
2020 (the “Trust Agreement”), the Company hereby requests that you deliver to the redeeming Public Stockholders
on behalf of the Company $___________ of the principal and 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 funds as described
above are needed to pay the 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 amended and restated certificate of
incorporation (A) 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 Company’s public shares of Common Stock if the Company does not
complete its initial Business Combination within the time period set forth therein or (B) with respect to any other provision
relating to the Company’s 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 to the redeeming Public
Stockholders in accordance with your customary procedures.
| |
Very truly yours, |
| |
|
| |
KINS Technology Group Inc. |
| cc: | UBS Securities LLC |
| Stifel, Nicolaus & Company, Incorporated |
| | BTIG, LLC |
| | |
Exhibit 10.4
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this
“Agreement”), dated as of [l], 2020, is made and entered
into by and between KINS Technology Group Inc., a Delaware corporation (the “Company”), KINS Capital
LLC, a Delaware limited liability company (the “Sponsor”), and certain funds and accounts managed by
BlackRock, Inc. as set forth in the signature pages hereto (the “BlackRock Entities” and, together with the
Sponsor and any person or entity who hereafter becomes a party to this Agreement pursuant to Section 5.2 of this Agreement,
the “Holders” and each, a “Holder”).
RECITALS
WHEREAS, the Sponsor and the
BlackRock Entities own an aggregate of 5,750,000 shares of the Company’s Class B common stock, par value $0.0001
per share (the “Founder Shares”);
WHEREAS, the Founder Shares are convertible
into shares of the Company’s Class A common stock, par value $0.0001 per share (“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 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,
on October 14, 2020, the Company entered into those certain Subscription Agreements with each of the BlackRock Entities pursuant
to which the BlackRock Entities agreed to purchase an aggregate of 980,393 warrants (the “BlackRock Warrants”),
in a private placement transaction occurring simultaneously with the closing of the Company's initial public offering;
WHEREAS, on the date hereof, the
Company and the Sponsor entered into that certain Warrant Purchase Agreement pursuant to which the Sponsor agreed to purchase
7,019,607 warrants (or up to 7,919,607 warrants depending on the extent to which the underwriters in the Company's initial public
offering exercise their over-allotment option) (the “Sponsor Warrants” and, together with the BlackRock Warrants,
the “Private Placement Warrants”), in a private placement transaction occurring simultaneously with the closing
of the Company's initial public offering; 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 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 Chief Financial Officer of the Company, 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.
“BlackRock Entities” shall have the
meaning given in the Recitals hereto.
“BlackRock Warrants” shall have the
meaning given in the Recitals hereto.
“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 Securities and Exchange Commission.
“Common Stock”
shall have the meaning given in the Recitals hereto.
“Company” shall
have the meaning given in the Preamble.
“Demand Registration”
shall have the meaning given in subsection 2.1.1.
“Demanding Holder”
shall have the meaning given in subsection 2.1.1.
“Exchange Act”
shall mean the Securities Exchange Act of 1934, as it may be amended from time to time.
“Form S-1”
shall have the meaning given in subsection 2.1.1.
“Form S-3”
shall have the meaning given in subsection 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 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 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 Company’s public stockholders
having the right to exchange their shares of Common Stock for cash, securities or other property.
“Holders” shall
have the meaning given in the Preamble.
“Insider Letter”
shall mean that certain letter agreement, dated the date hereof, by and among the Company, the Sponsor and each of the other parties
thereto.
“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 case of a 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 Sponsor Warrants 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 Warrants”
shall have the meaning given in the Recitals hereto.
“Private Placement
Warrants Lock-up Period” shall mean, with respect to Private Placement Warrants and any of the Common Stock
issued or issuable upon the exercise or conversion of the Private Placement Warrants that are held by the initial purchasers
of such Private Placement Warrants or their Permitted Transferees, the period ending 30 days after the completion of the
Company’s initial Business Combination.
“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 Sponsor
Warrants (including any shares of the Common Stock issued or issuable upon the exercise of any such Sponsor Warrants), (c) any
outstanding share of the Common Stock or any other equity security (including the shares of the 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, and
(e) any other equity security of the Company or any of its subsidiaries, or any successor, issued or issuable with respect
to any such share of the Common Stock by way of a stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation, spin-off 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 have been sold without registration
pursuant to Section 4(a)(1) of the Securities Act or Rule 144 or Rule 145 promulgated under the Securities
Act (or any successor rule promulgated thereafter by the Commission); 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 outside 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 from time to time.
“Shelf” shall
have the meaning given in subsection 2.3.1.
“Sponsor” shall
have the meaning given in the Recitals hereto.
“Sponsor Warrants”
shall have the meaning given in the Recitals hereto.
“Subsequent Shelf Registration”
shall have the meaning given in subsection 2.3.2.
“Takedown Requesting Holder”
shall have the meaning given in subsection 2.3.3.
“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.
“Underwritten Shelf Takedown”
shall have the meaning given in subsection 2.3.3.
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, the Holders of at least thirty
percent (30%) in interest of the then outstanding number of Registrable Securities (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 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 shares of Common Stock or other equity securities that the Company desires to sell and the shares
of 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 shares of 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 shares
of 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. 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 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 the Sponsor or its designees
or affiliates, 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 an 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 shares of the Common Stock that the Company desires to sell, taken together with
(i) the shares of 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 shares of 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 shares of 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, based on the respective number of Registrable Securities that each Holder has so requested
exercising its rights to register its Registrable Securities pursuant to subsection 2.2.1 hereof, 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 shares of 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 shares of 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, based on the respective number of Registrable Securities that each Holder has requested be included in such
Underwritten Registration and the aggregate number of Registrable Securities that the Holders have requested to be included in
such Underwritten Registration, 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 shares of 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 shares of 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 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.
2.3.1 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 subsection 2.3.1 (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) 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) days
after the receipt by the Holder of the notice from the Company. As soon as practicable thereafter, but not more than ten (10) 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 subsection 2.3.1 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.
2.3.2 If
any Shelf ceases to be effective under the Securities Act for any reason at any time while Registrable Securities included thereon
are still outstanding, the Company shall use its commercially reasonable efforts to as promptly as is reasonably practicable cause
such Shelf to again become effective under the Securities Act (including obtaining the prompt withdrawal of any order suspending
the effectiveness of such Shelf), and shall use its commercially reasonable efforts to as promptly as is reasonably practicable
amend such Shelf in a manner reasonably expected to result in the withdrawal of any order suspending the effectiveness of such
Shelf or file an additional registration statement (a “Subsequent Shelf Registration”) registering the resale
of all Registrable Securities including on such Shelf, and pursuant to any method or combination of methods legally available to,
and requested by, any Holder. If a Subsequent Shelf Registration is filed, the Company shall use its commercially reasonable efforts
to (i) cause such Subsequent Shelf Registration to become effective under the Securities Act as promptly as is reasonably
practicable after the filing thereof (it being agreed that the Subsequent Shelf Registration shall be an automatic shelf registration
statement (as defined in Rule 405 promulgated under the Securities Act) if the Company is a well-known seasoned issuer (as
defined in Rule 405 promulgated under the Securities Act) at the most recent applicable eligibility determination date) and
(ii) keep such Subsequent Shelf Registration 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 thereon. Any such Subsequent Shelf
Registration shall be on Form S-3 to the extent that the Company is eligible to use such form. Otherwise, such Subsequent
Shelf Registration shall be on another appropriate form. In the event that any Holder holds Registrable Securities that are not
registered for resale on a delayed or continuous basis, the Company, upon request of a Holder shall promptly use its commercially
reasonable efforts to cause the resale of such Registrable Securities to be covered by either, at the Company’s option, a
Shelf (including by means of a post-effective amendment) or a Subsequent Shelf Registration and cause the same to become effective
as soon as practicable after such filing and such Shelf or Subsequent Shelf Registration shall be subject to the terms hereof;
provided, however, the Company shall only be required to cause such Registrable Securities to be so covered once
annually after inquiry of the Holders.
2.3.3 At
any time and from time to time after a Shelf has been declared effective by the Commission, the Sponsor and the Takedown Requesting
Holders (if any) may request to sell all or any portion of its Registrable Securities in an underwritten offering that is registered
pursuant to the Shelf (each, an “Underwritten Shelf Takedown”); provided that the Company shall only
be obligated to effect an Underwritten Shelf Takedown if such offering shall include securities with a total offering price (including
piggyback securities and before deduction of underwriting discounts) reasonably expected to exceed, in the aggregate, $5,000,000.
All requests for Underwritten Shelf Takedowns shall be made by giving written notice to the Company at least 48 hours prior to
the public announcement of such Underwritten Shelf Takedown, which shall specify the approximate number of Registrable Securities
proposed to be sold in the Underwritten Shelf Takedown and the expected price range (net of underwriting discounts and commissions)
of such Underwritten Shelf Takedown. The Company shall include in any Underwritten Shelf Takedown the securities requested to be
included by any holder (each, a “Takedown Requesting Holder”) at least 24 hours prior to the public announcement
of such Underwritten Shelf Takedown pursuant to written contractual piggyback registration rights of such holder (including to
those set forth herein). The Sponsor and the Takedown Requesting Holders (if any) shall have the right to select the underwriter(s) for
such offering (which shall consist of one or more reputable nationally recognized investment banks), subject to the Company’s
prior approval which shall not be unreasonably withheld, conditioned or delayed.
2.3.4 If
the managing Underwriter or Underwriters in an Underwritten Shelf Takedown, in good faith, advises the Company, the Sponsor and
the Takedown Requesting Holders (if any) in writing that the dollar amount or number of Registrable Securities that the Sponsor
and the Takedown Requesting Holders (if any) desire to sell, taken together with all other Common Stock or other equity securities
that the Company desires to sell, exceeds the Maximum Number of Securities, then the Company shall include in such Underwritten
Shelf Takedown, as follows: (i) first, the Registrable Securities of the Sponsor 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 the Takedown Requesting Holders, if any,
that can be sold without exceeding the Maximum Number of Securities, determined pro rata, based on the respective number of Registrable
Securities that each Takedown Requesting Holder has so requested to be included in such Underwritten Shelf Takedown.
2.3.5 The
Sponsor and the Takedown Requesting Holders (if any) shall have the right to withdraw from an Underwritten Shelf Takedown for
any or no reason whatsoever upon written notification to the Company and the Underwriter or Underwriters (if any) of its intention
to withdraw from such Underwritten Shelf Takedown prior to the public announcement of such Underwritten Shelf Takedown. Notwithstanding
anything to the contrary in this Agreement, the Company shall be responsible for the Registration Expenses incurred in connection
with an Underwritten Shelf Takedown prior to a withdrawal under this subsection 2.3.5.
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, the Chief Executive Officer, the President or the Secretary of the Company
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, the Company shall not be
required to effect or permit any Registration or cause any Registration Statement to 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 Warrans 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 an initial 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, 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. 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.
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, directors and
agents and each person who controls such Holder (within the meaning of the Securities Act) against all losses, claims, damages,
liabilities and out-of-pocket expenses (including, without limitation reasonable outside attorneys’ fees) resulting from
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
or affidavit so 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, officers
and agents and each person who controls the Company (within the meaning of the Securities Act) against all losses, claims, damages,
liabilities and out-of-pocket expenses (including, without limitation reasonable outside attorneys’ fees) resulting from
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, 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 he, she or 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 out-of-pocket 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 out-of-pocket 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 out-of-pocket 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:
Four Palo Alto Square, Suite 200, 3000 El Camino Real, Palo Alto, CA 94306, email: [l],
and, if to any Holder, at such Holder’s address 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 thirty (30) days after delivery of such notice as provided in this Section 5.1.
5.2 Assignment;
No Third Party Beneficiaries.
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 Warrans 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.
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.
5.3 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.
5.4 Governing
Law; Venue. NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY ANY OF THE PARTIES HERETO, THE PARTIES
EXPRESSLY AGREE THAT (1) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE OF NEW YORK, INCLUDING,
WITHOUT LIMITATION, SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND NEW YORK CIVIL PRACTICE LAWS AND RULES
327(B), AS APPLIED TO AGREEMENTS AMONG NEW YORK RESIDENTS ENTERED INTO AND TO BE PERFORMED ENTIRELY WITHIN NEW YORK AND (2) SUBJECT
TO APPLICABLE LAW, 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.
5.5 TRIAL
BY JURY. EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY
TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND, THEREFORE, EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY ACTION
DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT.
5.6 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.
5.7 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.
5.8 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.
5.9 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.
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COMPANY: |
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KINS TECHNOLOGY GROUP INC. |
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a Delaware corporation |
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HOLDER: |
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KINS CAPITAL LLC |
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a Delaware limited liability company |
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Title: |
Exhibit 10.6
WARRANT PURCHASE AGREEMENT
[l],
2020
THIS WARRANT PURCHASE AGREEMENT (this “Agreement”),
is entered into by and between KINS Technology Group Inc., a Delaware corporation (the “Company”), and
KINS Capital LLC, a Delaware limited liability company (the “Purchaser”).
WHEREAS, the Company intends to consummate
an initial public offering of the Company’s units (the “Public Offering”), each unit consisting
of one share of Class A common stock of the Company, par value $0.0001 per share (a “Share”), and
one-half of one redeemable warrant, each whole warrant entitling the holder to purchase one Share at an exercise price of $11.50
per Share, as set forth in the Company’s Registration Statement on Form S-1, filed with the U.S. Securities and Exchange
Commission, File No. 333-249177 (the “Registration Statement”), under the Securities Act of 1933, as
amended (the “Securities Act”); and
WHEREAS, pursuant to this Agreement,
the Purchaser has agreed to purchase up to an aggregate of 7,019,607 warrants (and up to 7,919,607 warrants depending on the
extent to which the underwriters in the Public Offering exercise their over-allotment option (the
“Option”)) (the “Sponsor Warrants”), each Sponsor Warrant entitling the
holder to purchase one Share at an exercise price of $11.50 per Share.
NOW THEREFORE, in consideration of the mutual
promises contained in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties to this Agreement hereby, intending legally to be bound, agree as follows:
Section 1. Authorization,
Purchase and Sale; Terms of the Sponsor Warrants.
A. Authorization
of the Sponsor Warrants. The Company has duly authorized the issuance and sale of the Sponsor Warrants to the Purchaser.
B. Purchase
and Sale of the Sponsor Warrants.
(i) On
the date of the initial consummation of the Public Offering or on such earlier time and date as may be mutually agreed by the
Purchaser and the Company (the “IPO Closing Date”), the Company shall issue and sell to the
Purchaser, and the Purchaser shall purchase from the Company, 7,019,607 Sponsor Warrants at a price of $1.00 per warrant
(such aggregate purchase price for such Sponsor Warrants, the “Purchase Price”), which shall be paid by
wire transfer of immediately available funds to the Company at least one (1) business day prior to such IPO Closing Date
in accordance with the wiring instructions provided by the Company to Purchaser.
(ii) On
the consummation of the closing of the Option, if any, in connection with the Public Offering or on such earlier time and date
as may be mutually agreed by the Purchaser and the Company (an “Over-allotment Closing Date,” and each
Over-allotment Closing Date (if any) and the IPO Closing Date, a “Closing Date”), the Company shall issue
and sell to the Purchaser, and the Purchaser shall purchase from the Company, up to 900,000 Sponsor Warrants (or, to the extent
the Option is not exercised in full, a lesser number of Sponsor Warrants in proportion to the portion of the Option that is then
exercised) at a price of $1.00 per warrant for an aggregate purchase price of up to $900,000 (such aggregate purchase price for
such Sponsor Warrants, the “Over-allotment Purchase Price”), which shall be paid by wire transfer of
immediately available funds to the Company at least one (1) business day prior to such Over-allotment Closing Date in accordance
with the wiring instructions provided by the Company to Purchaser.
(iii) On
each Closing Date, following the payment by the Purchaser of the Purchase Price or Over-Allotment Purchase Price, as applicable,
by wire transfer of immediately available funds or by such other method as may be reasonably acceptable to the Company, the Company,
at its option, shall deliver a certificate to the Purchaser evidencing the Sponsor Warrants purchased on such Closing Date duly
registered in the Purchaser’s name or effect such delivery in book-entry form.
C. Terms
of the Sponsor Warrants.
(i) Each
Sponsor Warrant shall have the terms set forth in a Warrant Agreement (the “Warrant Agreement”) to be
entered into by the Company and a warrant agent, which Warrant Agreement shall also govern the terms for the warrants to be sold
in the Public Offering. All Sponsor Warrants will be subject to the same Warrant Agreement and will have the same terms.
(ii) At
the time of, or prior to, the closing of the Public Offering, the Company and the Purchaser shall enter into a registration rights
agreement (the “Registration Rights Agreement”) pursuant to which the Company will grant certain registration
rights to the Purchaser relating to the Sponsor Warrants purchased by the Purchaser and the Shares underlying such Sponsor Warrants.
Section 2. Representations
and Warranties of the Company. As a material inducement to the Purchaser to enter into this Agreement and purchase the Sponsor
Warrants, the Company hereby represents and warrants to the Purchaser (which representations and warranties shall survive the
Closing Date) that:
A. Organization
and Corporate Power. The Company is a corporation duly organized, validly existing and in good standing under the laws of the
State of Delaware and is qualified to do business in every jurisdiction in which the failure to so qualify would reasonably be
expected to have a material adverse effect on the financial condition, operating results or assets of the Company. The Company
possesses all requisite corporate power and authority necessary to carry out the transactions contemplated by this Agreement and
the Warrant Agreement.
B. Authorization;
No Breach.
(i) The
execution, delivery and performance of this Agreement and the Sponsor Warrants have been duly authorized by the Company as of the
applicable Closing Date. This Agreement constitutes the valid and binding obligation of the Company, enforceable in accordance
with its terms. Upon issuance in accordance with, and payment pursuant to, the terms of the Warrant Agreement and this Agreement,
the Sponsor Warrants will constitute valid and binding obligations of the Company, enforceable in accordance with their terms as
of the applicable Closing Date.
(ii) The
execution and delivery by the Company of this Agreement and the Sponsor Warrants, the issuance and sale of the Sponsor Warrants,
the issuance of the Shares upon exercise of the Sponsor Warrants and the fulfillment of and compliance with the respective terms
hereof and thereof by the Company, do not and will not as of the applicable Closing Date (a) conflict with or result in a
breach of the terms, conditions or provisions of, (b) constitute a default under, (c) result in the creation of any lien,
security interest, charge or encumbrance upon the Company’s capital stock or assets under, (d) result in a violation
of, or (e) require any authorization, consent, approval, exemption or other action by or notice or declaration to, or filing
with, any court or administrative or governmental body or agency pursuant to the amended and restated certificate of incorporation
or the by-laws of the Company (as in effect on the date hereof or as may be amended up to the applicable Closing Date), or any
material law, statute, rule or regulation to which the Company is subject, or any agreement, order, judgment or decree to
which the Company is subject, except for any filings required after the date hereof under federal or state securities laws.
C. Title
to Securities. Upon issuance in accordance with, and payment pursuant to, the terms hereof and the Warrant Agreement, the Shares
issuable upon exercise of the Sponsor Warrants will be duly and validly issued, fully paid and nonassessable. On the date of issuance
of the Sponsor Warrants, the shares issuable upon exercise of the Sponsor Warrants shall have been reserved for issuance. Upon
issuance in accordance with, and payment pursuant to, the terms hereof and the Warrant Agreement, the Purchaser will have good
title to the Sponsor Warrants purchased by it and the Shares issuable upon exercise of such Sponsor Warrants, free and clear of
all liens, claims and encumbrances of any kind, other than (i) transfer restrictions hereunder and under the other agreements
contemplated hereby, (ii) transfer restrictions under federal and state securities laws, and (iii) liens, claims or encumbrances
imposed due to the actions of the Purchaser.
D. Governmental
Consents. No permit, consent, approval or authorization of, or declaration to or filing with, any governmental authority is
required in connection with the execution, delivery and performance by the Company of this Agreement or the consummation by the
Company of any other transactions contemplated hereby, except for applicable requirements of the Securities Act.
Section 3. Representations
and Warranties of the Purchaser. As a material inducement to the Company to enter into this Agreement and issue and sell the
Sponsor Warrants to the Purchaser, the Purchaser hereby represents and warrants to the Company (which representations and warranties
shall survive each Closing Date) that:
A. Organization
and Requisite Authority. The Purchaser possesses all requisite power and authority necessary to carry out the transactions
contemplated by this Agreement.
B. Authorization;
No Breach.
(i) This
Agreement constitutes a valid and binding obligation of the Purchaser, enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other laws of general applicability relating to or affecting
creditors’ rights and to general equitable principles (whether considered in a proceeding in equity or law).
(ii) The
execution and delivery by the Purchaser of this Agreement and the fulfillment of and compliance with the terms hereof by the Purchaser
does not and shall not as of each Closing Date conflict with or result in a breach by the Purchaser of the terms, conditions or
provisions of any agreement, instrument, order, judgment or decree to which the Purchaser is subject.
C. Investment
Representations.
(i) The
Purchaser is acquiring the Sponsor Warrants and, upon exercise of the Sponsor Warrants, the Shares issuable upon such exercise
(collectively, the “Securities”) for the Purchaser’s own account, for investment purposes only
and not with a view towards, or for resale in connection with, any public sale or distribution thereof.
(ii) The
Purchaser is an “accredited investor” as such term is defined in Rule 501(a)(3) of Regulation D under
the Securities Act, and the Purchaser has not experienced a disqualifying event as enumerated pursuant to Rule 506(d) of
Regulation D under the Securities Act.
(iii) The
Purchaser understands that the Securities are being offered and will be sold to it in reliance on specific exemptions from the
registration requirements of the United States federal and state securities laws and that the Company is relying upon the truth
and accuracy of, and the Purchaser’s compliance with, the representations and warranties of the Purchaser set forth herein
in order to determine the availability of such exemptions and the eligibility of the Purchaser to acquire such Securities.
(iv) The
Purchaser did not decide to enter into this Agreement as a result of any general solicitation or general advertising within the
meaning of Rule 502(c) of Regulation D under the Securities Act.
(v) The
Purchaser has been furnished with all materials relating to the business, finances and operations of the Company and materials
relating to the offer and sale of the Securities which have been requested by the Purchaser. The Purchaser has been afforded the
opportunity to ask questions of the executive officers and directors of the Company. The Purchaser understands that its investment
in the Securities involves a high degree of risk and it has sought such accounting, legal and tax advice as it has considered necessary
to make an informed investment decision with respect to the acquisition of the Securities.
(vi) The
Purchaser understands that no United States federal or state agency or any other government or governmental agency has passed on
or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment in the Securities
by the Purchaser nor have such authorities passed upon or endorsed the merits of the offering of the Securities.
(vii) The
Purchaser understands that: (a) the Securities have not been and are not being registered under the Securities Act or any
state securities laws, and may not be offered for sale, sold, assigned or transferred unless (1) in a transaction registered
thereunder or (2) sold in reliance on an exemption therefrom; and (b) except as specifically set forth in the Registration
Rights Agreement, neither the Company nor any other person is under any obligation to register the Securities under the Securities
Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder. In this regard, the Purchaser
understands that the Securities and Exchange Commission has taken the position that promoters or affiliates of a blank check company
and their transferees, both before and after a Business Combination (as defined in the Warrant Agreement), are deemed to be “underwriters”
under the Securities Act when reselling the securities of a blank check company. Based on that position, Rule 144 adopted
pursuant to the Securities Act would not be available for resale transactions of the Securities despite technical compliance with
the requirements of such Rule, and the Securities can be resold only through a registered offering or in reliance upon another
exemption from the registration requirements of the Securities Act.
(viii) The
Purchaser understands that the Sponsor Warrants will bear the legend substantially in the form set forth in the Warrant Agreement.
(ix) The
Purchaser has such knowledge and experience in financial and business matters, knowledge of the high degree of risk associated
with investments in the securities of companies in the development stage such as the Company, is capable of evaluating the merits
and risks of an investment in the Securities and is able to bear the economic risk of an investment in the Securities in the amount
contemplated hereunder for an indefinite period of time.
Section 4. Conditions
of the Purchaser’s Obligations. The obligations of the Purchaser to purchase and pay for the Sponsor Warrants is subject
to the fulfillment, on or before the applicable Closing Date, of each of the following conditions:
A. Representations
and Warranties. The representations and warranties of the Company contained in Section 2 shall be true and correct
at and as of the applicable Closing Date as though then made.
B. Performance.
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 the applicable Closing Date.
C. No
Injunction. 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. Warrant
Agreement. The Company shall have entered into a Warrant Agreement with a warrant agent on terms satisfactory to the Purchaser.
Section 5. Conditions
of the Company’s Obligations. The obligations of the Company to the Purchaser under this Agreement are subject to the
fulfillment, on or before the applicable Closing Date, of each of the following conditions:
A. Representations
and Warranties. The representations and warranties of the Purchaser contained in Section 3 shall be true and correct
at and as of the applicable Closing Date as though then made.
B. Performance.
The Purchaser 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 Purchaser on or before the applicable Closing Date.
C. No
Injunction. 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. Warrant
Agreement. The Company shall have entered into a Warrant Agreement with a warrant agent on terms satisfactory to the Company.
Section 6. Survival
of Representations and Warranties. All of the representations and warranties contained herein shall survive the applicable
Closing Date.
Section 7. Definitions.
Terms used but not otherwise defined in this Agreement shall have the meaning assigned to such terms in the Registration Statement.
Section 8. Miscellaneous.
A. Successors
and Assigns. Except as otherwise expressly provided herein, all covenants and agreements contained in this Agreement by or
on behalf of any of the parties hereto shall bind and inure to the benefit of the respective successors of the parties hereto whether
so expressed or not. Notwithstanding the foregoing or anything to the contrary herein, the parties may not assign this Agreement,
other than assignments by the Purchaser to affiliates thereof.
B. Severability.
Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement.
C. Notices.
All written notices provided for herein shall be in writing and be given in person or by means of facsimile or other electronic
communication (with request for assurance of receipt in a manner typical with respect to communication of that type), by overnight
courier or by mail, and shall become effective: (a) on delivery if given in person; (b) on the date of transmission if
sent by facsimile or other electronic communication; (c) one (1) business day after delivery to the overnight service
or (d) four (4) business days after being mailed, with proper postage and documentation, for first-class registered or
certified mail, prepaid. All notices shall be addressed to the addresses listed in Exhibit A hereto.
D. Counterparts.
This Agreement may be executed simultaneously in two (2) or more counterparts, none of which need contain the signatures of
more than one party, but all such counterparts taken together shall constitute one and the same agreement. Signatures to this Agreement
transmitted via facsimile or e-mail shall be valid and effective to bind the party so signing.
E. Descriptive
Headings; Interpretation. The descriptive headings of this Agreement are inserted for convenience only and do not constitute
a substantive part of this Agreement. The use of the word “including” in this Agreement shall be by way of example
rather than by limitation.
F. Governing
Law. This Agreement shall be deemed to be a contract made under the laws of the State of New York and for all purposes shall
be construed in accordance with the internal laws of the State of New York.
G. Amendments.
This Agreement may not be amended, modified or waived as to any particular provision, except by a written instrument executed by
all parties hereto.
[Signature page follows]
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement to be effective as of the date first set forth above.
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PURCHASER: |
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KINS CAPITAL LLC |
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| KINS TECHNOLOGY GROUP INC. |
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Exhibit A
Notices
If to the Purchaser:
KINS Capital LLC
Four Palo Alto Square, Suite 200
3000 El Camino Real
Palo Alto, CA 94306
Telephone: [l]
Email: [l]
If to the Company:
KINS Technology Group Inc.
Four Palo Alto Square, Suite 200
3000 El Camino Real
Palo Alto, CA 94306
Telephone: [l]
Email: [l]
Exhibit 10.8
KINS Technology Group Inc.
Four Palo Alto Square, Suite 200
3000 El Camino Real
Palo Alto, CA 94306
[l],
2020
KINS Capital LLC
Four Palo Alto Square, Suite 200
3000 El Camino Real
Palo Alto, CA 94306
Re: Administrative Services Agreement
Gentlemen:
This letter agreement by and between
KINS Technology Group Inc., a Delaware corporation (the “Company”), and KINS Capital LLC, a
Delaware limited liability company (“KINS Capital”), dated as of the date hereof, will confirm our
agreement that, commencing on the date the securities of the Company are first listed on The Nasdaq Capital Market (the
“Listing Date”) and continuing until the earlier of the consummation by the Company of an initial
business combination and the Company’s liquidation (in each case as described in the Registration Statement on
Form S-1 (File No. 333-249177) filed with the Securities and Exchange Commission) (such earlier date hereinafter
referred to as the “Termination Date”):
| 1. | KINS Capital shall make available to the Company, at Four Palo Alto Square, Suite 200, 3000 El Camino Real, Palo Alto,
CA 94306 (or any successor location or other existing office locations of KINS Capital or any of its affiliates), certain office
space, administrative and support services, including compliance services, as may be reasonably requested by the Company. In exchange
therefor, the Company shall pay, on the first day of each month, to KINS Capital the sum of $20,000 per month commencing on the
Listing Date and continuing monthly thereafter until the Termination Date; and |
| 2. | KINS Capital hereby irrevocably waives any and all right, title, interest, causes of action and claims of any kind or nature
whatsoever (each, a “Claim”) in or to, and any and all right to seek payment of any amounts due to it
out of, the trust account established for the benefit of the public stockholders of the Company and into which substantially all
of the proceeds of the Company’s initial public offering will be deposited (the “Trust Account”),
and hereby irrevocably waives any Claim it presently has or may have in the future as a result of, or arising out of, this letter
agreement, which Claim would reduce, encumber or otherwise adversely affect the Trust Account or any monies or other assets in
the Trust Account, and further agrees not to seek recourse, reimbursement, payment or satisfaction of any Claim against the Trust
Account or any monies or other assets in the Trust Account for any reason whatsoever. |
This letter agreement constitutes the entire
agreement and understanding of the parties hereto in respect of its subject matter 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 amended,
modified or waived as to any particular provision, except by a written instrument executed by all parties hereto.
No party hereto may assign either this
letter agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the other party,
provided that KINS Capital may assign this letter agreement to an affiliate without the prior written approval of the Company.
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, the entire relationship
of the parties hereto, and any litigation between the parties (whether grounded in contract, tort, statute, law or equity) shall
be governed by and construed in accordance with the laws of the State of New York.
This letter agreement may be executed in
one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute
one and the same letter agreement.
[Signature page follows]
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Very truly yours, |
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KINS TECHNOLOGY GROUP INC. |
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| AGREED TO AND ACCEPTED BY: |
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| KINS CAPITAL LLC |
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Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
We hereby consent to the use in this Registration
Statement on Amendment No. 2 to Form S-1, of our report dated October 14, 2020, relating to the balance sheet of KINS Technology
Group Inc as of July 27, 2020, and the related statements of operations, changes in stockholder’s equity and cash flows for
the period from July 20, 2020 (inception) through July 27, 2020, and to the reference to our Firm under the caption “Experts”
in the Prospectus.
| /s/ WithumSmith+Brown, PC |
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| New York, New York |
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| December 8, 2020 |
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